The Central government of India announced an overhaul of public sector banks.
As a part of this process, the government drafted executives from the private sector to run at least two state-run lenders, for the first time since nationalization.
Reasons behind the decision
The move is part of a strategy to professionalize bank boards and improve the performance of government-controlled banks that account for 70% of the deposits and loans extended by banks.
Background of the decision
- The reform measures have been in the works for a year.
- It began soon after the arrest of Syndicate Bank chairman and MD S K Jain on corruption charges last August
- Recently, the lenders (banks) have reported steep fall in profits due to mounting non-performing loans.
- PM Narendra Modi held a first of its kind interaction with bank chiefs, which was followed up by individual presentation by 22 banks to the finance ministry.
- Eventually, the government released details of the capitalization plan and announced the names of five new bank MD & CEOs and an equal number of non-executive chairmen, a first for public sector banks.
Who are those new Executives?
Of the five MDs - P S Jayakumar (Bank of Baroda) and Rakesh Sharma (Canara Bank) - are from the private sector, while the other three - Usha Ananthasubramanian (Punjab National Bank), M O Rego (Bank of India) and Kishore Kharat Piraji (IDBI Bank) - are with state-run entities.
Similarly, two of the chairmen - Ravi Venkatesan (independent director at Infosys) and T N Manoharan (director at Tech Mahindra and Public Health Foundation) - are also from the private sector.
