FinMin for consolidation of PSU banks

Concerned over sub-optimal performance of the PSU banks, the Finance Ministry today said it would encourage them to restructure business strategies and consider consolidation and merger with other lenders.
"Government wants to encourage bank boards to restructure their business strategy and also suggest way forward for their consolidation and merger with other banks if it is win-win for both," a Finance Ministry release said.
In order to improve the governance of public sector banks, it said, the government intends to set up an autonomous 'Bank Board Bureau' with professional members.
The board would be responsible for search and selection of heads of PSBs, as also for non-official directors of the banks. This, it said, would be an interim step towards moving in the direction of having a Bank Investment Company, which will be a holding company for PSBs.

On appointment of non-official directors, it said, guidelines is being re-visited to ensure that bank boards get people with relevant expertise.
Anybody eligible would be able to apply through a website which will soon be made public, it said.

"The focus of these reforms is to improve the quality of deliberations in bank boards, leading to better asset quality and further resulting in better market valuations," it said.
Highlighting some of the recent measures taken to improve the performance, it said, the post of Chairman and Managing Director has been separated.
Bankers from both public and private sector can apply for the top job, the statement said adding "higher salary can be given in appropriate cases".

The Finance Ministry has also revamped the selection system by including structured three separate interviews, allotment of banks on merit-cum-preference basis.