Govt Should Cut Hold­ing in PSBs to Un­der 50%, says RBI Panel Re­port

‘Watch­dog should’ve last word on reg­u­lat­ing PSU banks’

The Economic Times - - Front Page - OUR BUREAU

The tim­ing is im­pec­ca­ble. A day af­ter the exit polls set the mar­ket on fire, a Re­serve Bank of In­dia (RBI) panel re­port has rec­om­mended that the govern­ment should di­vest its stake in state-owned banks to less than 50%, al­low pri­vate eq­uity houses to own 40% in dis­tressed banks, and strip man­agers of pri­vate sec­tor banks of their bonuses and Esops if they are caught ever-green­ing sticky loans. It has also said that RBI — and not the fi­nance min­istry — should have the last word on reg­u­la­tion of pub­lic sec­tor banks which com­mand 70% of the mar­ket share. “Boards (of PSU banks) are dis­em­pow­ered, and the se­lec­tion process for di­rec­tors is in­creas­ingly com­pro­mised,” said the re­port. The rec­om­men­da­tions have the po­ten­tial to trans­form In­dian banks. The RBI-con­sti­tuted com­mit­tee is headed by PJ Nayak, the bu­reau­crat-turned­banker who led Axis Bank for a decade.

The panel has pro­posed an age limit of 65 years for CEOs and who­le­time di­rec­tors of pri­vate sec­tor banks. Once im­ple­mented, lenders like In­dusInd Bank and HDFC Bank would have to iden­tify suc­ces­sors for Romesh Sobti and Aditya Puri in the next two years.

Change in the Air

PJ Nayak The rec­om­men­da­tions of the RBI panel have the po­ten­tial to trans­form In­dian banks al­lowed to own 40% in dis­tressed banks ever-green­ing bad loans should be stripped of bonuses, Esops for CEOs and who­le­time di­rec­tors of pvt banks

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.