Centre invites suggestions from public to help improve banks’ performance
People can give their views on www.mygov.in, says FinMin
New Delhi, December 1:
With bad debts rising and profit margins depleting, the Centre will use crowd sourcing to help improve the performance of public sector banks (PSBs). There are total of 27 public sector banks, including five associate banks of State Bank of India.
“Suggestions from the general public as to how to improve performance of public sector banks on various parameters are invited by Department of Financial Services, Ministry of Finance, Government of India,” a Government statement said. Suggestions can be given on www.mygov.in.
In order to assist the public in suggestion-making, the Centre has uploaded comparative data on various parameters of public and private banks. “It can be observed that there is a huge scope for improvement of public sector banks in all parameters, especially efficiency parameters,” the Government said. The data is for 2013-14. However, much of the updated data (up to September 30 in the current fiscal year) on the same subject was given to the Lok Sabha in response to a question on November 28. Minister of State for Finance Jayant Sinha said it had been observed from the data that public sector banks lagged private ones on asset quality and profitability parameters.Bad debts
The issue of bad debts (non-performing assets or NPAs) had figured prominently during a review meeting taken by Finance Minister Arun Jaitley last month. After the meeting, a senior Finance Ministry official had termed NPAs as a ‘legacy’ issue and claimed that things would change now.
“It has happened because of a number of reasons. For two-three years, no good projects were coming. So, when total asset size does not increase, naturally your percentage of NPA will go up. These are all legacy issues. Now when the economy looks up, when new portfolio is generated by banks, these percentages will start coming down,” he said.
The Centre has already initiated some measures, such as changing the appointment process of chairman and managing director and executive director in public sector banks. It is also planning to separate the post of chairman and managing director.
At the same time, the Finance Ministry also told the Lok Sabha that it is considering reducing its stake in public sector banks to 52 per cent. Currently, regulation prescribes a minimum of 51 per cent government shareholding in public sector banks, however informally it has been kept at 58 per cent.