Gyan Sangam: Uniting to Strengthen Public Sector Banks
Gyan Sangam: Uniting to Strengthen Public Sector Banks
Gyan Sangam was the first of its kind initiative where a two day summit was held in Pune, Maharashtra. Banking officials as well as government officers and RBI officials gathered at NIBM (National Institute of Banking Management) Pune to discuss the ways in which the public banking sector should be strengthened in India. The Prime Minister as well as FMs Arun Jaitley and Jayant Sinha (Minister of State), RBI chief Raghuram Rajan and Chief Economic Adviser Arvind Subramanian attended the event.
No Political Interference
In the presence of a gathering of India’s PSU banks, PM Modi said the NDA government would steer clear of “political interference” and take steps to strengthen operations as well as achieve scale and boost inclusion plus financial literacy. Augmenting national economic growth is the core aim, said the PM.
Various seminars and group discussions were held on key important issues such as ensuring greater autonomy for banks, improvement of risk management practices and recapitalisation needs, improving asset quality and curbing money among others. Long as well as short term action plans were laid out along with an agenda for change.
Reorienting Strategies
The PSU banks also vowed to reorient strategies so that smaller ones can focus on niche capabilities. Steps will be taken for talent development and use of technologies in bigger ways. The work will be towards strengthening risk management and working with non banking channels such as bank correspondents and payment management systems.
Banks have urged the government to provide transfer in the stake to an independent bank investment committee run by professionals and aim to reduce stake below 51% which is the basic recommendations of the P. J. Nayak committee. There was a need for greater freedom in hiring decisions as well as lower scrutiny from vigilance agencies. Stronger debt recovery laws and lesser interference from governments through market distorting debt waivers or interest rate caps.
Need to Clean Up NPAs
The RBI governor has emphasised the need for cleaning up NPAs and restructuring stressed loans to place the economy back on track.
“The competition amongst the PSBs will also grow to meet these challenges. Accordingly, PSBs have to develop differentiated products,” he was also
quoted as saying in the official release.
Financial Inclusion Taken Up
Finance Minister Arun Jaitley has indicated that the government has established financial inclusion in a massive way through the Pradhan Mantri Jan Dhan Yojana and most bank accounts created through this scheme will be assisting in the introduction of DBT or direct benefit transfer. The two day banker’s retreat ended on Saturday, 3rd January 2014.
Five Resolutions
In a presentation made to the Prime Minister Narendra Modi, State Bank of India Chairperson Arundhati Bhattacharya has said, "We as a group [all public sector banks] have decided to adopt five major resolutions.”
The five resolutions include a decision to re-orient the portfolio of small public sector banks to focusing on specific and differentiated niches, building people capacity and use of more technology (more so for the top 30 processes), strengthening risk management practices and strengthening partner channels including business correspondents. Financial Services Secretary, Hasmukh Adhia has indicated "This is something banks have said they will work upon.”
Adhia also said, "Consolidation depends on the decision of the respective bank boards...the government is there to help.""We don't want to get into setting a mandate on what banks should do," he added.
An End To Lazy Banking
PM Narendra Modi has also called for an end to lazy banking and said he is against political interference in the functioning of banks, yet supports necessary intervention in public interest. He also called upon banks to establish top ranking banking institutions in the world. The PM also emphasised accountability.
“But accountability is essential,” Modi also said while addressing top executives of public sector banks and other financial institutions. The PM also said that the government will always oppose political interference but they will take political intervention into account as this will “enable the voice of the common man to reach such institution.”
The PM also called for a more proactive approach towards helping the common man.
Fighting Cyber Crime, Improving Financial Literacy
The PM also asked the banks for developing dedicated teams for fighting cybercrime and also stressed on the need to fight poor financial literacy in the nation.
The PM also said, “The banking sector of a country mirrors its economic rise. Japan and China had banks in the top ten banks of the world during their economic rise.” “As part of Corporate Social Responsibility, banks should take up one sector each year to play a positive role,” he also said adding banks should re-explore parameters for success.
Conclusion
Gyan Sangam is a good step forward for the Indian banking sector. With mutual concerns on both sides, (GoI and bankers), there is definite need for communication and further interaction. Gyan Sangam has served as a gateway for uniting banks to achieve new heights of success.
Further union of vision and motivations can serve as a good ground for building a successful public banking sector in the country. Low financial literacy is one of the biggest challenges facing India right now. People have less idea of how to invest their money and what ways they can use the banking sector services. More customer oriented banking services would go a long way in helping public sector banks to achieve a higher standard of success.
