As part of the banking sector reforms announced last week, the government is not only planning to strengthen the capital base of public sector banks, but is also planning a greater oversight on their performance and non-performing assets (NPAs).
To take stock of the NPAs, the government has constituted a committee under Banking Secretary Hasmukh Adhiya. The committee, with the help of the CBI and other investigating agencies, will oversee bad loans in the banks and also keep a tight vigil on those indulging in any kind of fraud.
A top level official said that the government has begun the drive to monitor banks in order to help reduce corruption and financial fraud there. Finance Minister Arun Jaitley had on Friday launched a seven-pronged plan, ‘Indradhanush’, to revamp functioning of public sector banks. The seven elements are appointments, board of bureau, capitalisation, de-stressing, empowerment, framework of accountability, and governance reforms.
In an important development, it announced the creation of Banks Board Bureau that is expected to replace existing board-level appointments for banks. Its members would be appointed in the next six months to be headed by the Reserve Bank of India (RBI) Governor. The Banks Board Bureau would also hold bad assets of public sector banks.