Learn from mistakes: Letter to BS on PNB scam and banking sector crisis

This refers to “Don't waste the bank scam crisis” by Somasekhar Sundaresan. The author makes very pertinent observations on the most relevant and contemporary topic of the day. The blessing in disguise is that the government and the Reserve Bank of India (RBI) could wake up and act swiftly to combat the threatening maladies of the public sector banks (PSB).

We do not know how many such malice driven episodes were swept under the carpet for long during the earlier regime. A separate holding company, may be under the Banks Board Bureau by amending the law, should be set up. The government cannot have the luxury of pumping in billions of public money into these PSBs every year. This evidently leads to a decisive step to reduce the government stake in PSBs. That money could be better utilised for education and the new health care initiatives. The selection of a banking personnel, particularly for top positions, has to be more rigid and objective. It is time Dr P J Nayak committee report is revisited and relevant recommendations implemented to secure the functioning of banks. A technical committee has to review the systems of reporting and put in triggers or alarms in place as a pro-active initiative rather than a reactive one. The Centre should also desist from appointing outsiders as the senior executives of PSBs. A wing in the finance ministry with experienced bankers may have to be formed to monitor the banks on a day-to-day basis. This wing should report to the finance minister before another big damage creeps in. 
 

B Venkateswaran  Chennai

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