Letters: Reforms in public banks

This refers to the report "More public sector bank reforms soon" (June 23). Out of the seven areas that banks' boards have to deliberate, three (business strategy, financial reports and their integrity and human resources) of them are quite interesting.

So far, all public sector banks (PSBs), irrespective of their strength, have adopted the same business strategy. They shifted their focus from corporate banking to retail banking and vice versa, depending on the business growth and the pitfalls they experienced. They did not have any unique business strategy, which would enable them to compete with their peers.

How come "financial reports and their integrity" finds a place among important areas to be deliberated by boards? The Reserve Bank of India would have proposed the verification of integrity, following the practice of almost all PSBs to window-dress their financial statements. The top managements resort to massive window-dressing to please their CEOs either by making huge provisions (that would reduce profits) if the person is new to the post or postponing the provisions - that results in higher profits. The integrated financial reports will not disclose the quantum of window-dressing, as it happens at different bank branches.

As for human resources, how would the board formulate human resources strategies that would motivate staff at different levels? PSBs' peers in the private sector have not bothered about the staff at branch level but have crafted intelligent strategies to motivate decision-makers at different management levels. This has resulted in the quality expansion of the loan book, which in turn has taken care of bad assets.

The areas chosen for reforms by PSBs are quite pertinent for formulation of policies but are difficult to implement.

K V Rao Bengaluru

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