Dilution of government stake, a more flexible personnel policy for public sector banks and digital resolution of debt recovery cases were some of the banking reforms unveiled by finance minister Arun Jaitley on Monday.
Speaking at the annual general meeting of the Indian Banks' Association, Jaitley said that the government is looking at bringing down equity stake in PSU banks to 52% even as it developed a system of professionalizing all personnel decisions in public sector banks.
The finance minister said that while the PSU banks would have to follow a developmental agenda of the state, their administration has to be guided purely from banking consideration and not rom any collateral conside ration. "The Prime Minister was candid enough to say that no bank would receive formal or informal directions from his office," said Jaitley. He said that the government was almost ready with a framework for a Banks Board Bureau so that all decisions taken by the banks can be proessionalized.
Speaking earlier at the event, Chanda Kochhar, MD & CEO, ICICI Bank, said that one of the issues facing the banking system was that several large projects were yet to generate cash flows. Also in cases of recalcitrant borrowers, the long pendency of cases was turning out to be a challenge for bankers.
Jaitley said that he has instructed the department of financial services to ensure that debt recovery tribunals and appellate tribunals are only `IT courts'. "The filing of pleadings, documents and replies would all be done on the net itself with only a provision for two oral hearings in a defined period of time. One for interim order, and one for final order. All other oral hearings in DRT could be eliminated," said Jaitley. The government is also working on a new law to fasttrack arbitration to address the stressed areas of the banking sector.
The finance minister further said that project monitoring was now taking place centrally at the Prime Minister's office. He said that investment in infrastructure, particularly highways, was set to kick off due to the cess imposed on fuel.
On power, he said that the issue was largely of state distribution companies failing to recover and the situation was challenging in some states, and the Reserve Bank of India had put two state governments on notice. "The RBI has informed the state governments that if they do not charge adequately, the banking system on its own cannot continue to provide the support," said Jaitley.
Speaking at the annual general meeting of the Indian Banks' Association, Jaitley said that the government is looking at bringing down equity stake in PSU banks to 52% even as it developed a system of professionalizing all personnel decisions in public sector banks.
The finance minister said that while the PSU banks would have to follow a developmental agenda of the state, their administration has to be guided purely from banking consideration and not rom any collateral conside ration. "The Prime Minister was candid enough to say that no bank would receive formal or informal directions from his office," said Jaitley. He said that the government was almost ready with a framework for a Banks Board Bureau so that all decisions taken by the banks can be proessionalized.
Speaking earlier at the event, Chanda Kochhar, MD & CEO, ICICI Bank, said that one of the issues facing the banking system was that several large projects were yet to generate cash flows. Also in cases of recalcitrant borrowers, the long pendency of cases was turning out to be a challenge for bankers.
Jaitley said that he has instructed the department of financial services to ensure that debt recovery tribunals and appellate tribunals are only `IT courts'. "The filing of pleadings, documents and replies would all be done on the net itself with only a provision for two oral hearings in a defined period of time. One for interim order, and one for final order. All other oral hearings in DRT could be eliminated," said Jaitley. The government is also working on a new law to fasttrack arbitration to address the stressed areas of the banking sector.
The finance minister further said that project monitoring was now taking place centrally at the Prime Minister's office. He said that investment in infrastructure, particularly highways, was set to kick off due to the cess imposed on fuel.
On power, he said that the issue was largely of state distribution companies failing to recover and the situation was challenging in some states, and the Reserve Bank of India had put two state governments on notice. "The RBI has informed the state governments that if they do not charge adequately, the banking system on its own cannot continue to provide the support," said Jaitley.
