CEOs review local, global best practices at Gyan Sangam
Deliberations at the Gyan Sangam —the two day banker’s retreat in Pune — could throw up changes to the priority sector lending norms, a top finance ministry official said on Friday.
Hasmukh Adhia, secretary, Department of Financial Services (DFS), told reporters the quota for priority sector loans, set in 1972 at 40% of total loans, had not been reviewed since then. “There is surely a need for changes in the priority sector lending norms with the consent of the government,” Adhia said, adding bankers would review the sectors covered by the norms.
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Bankers are meeting here to draw up a blueprint for reform of the banking system to be presented to the Prime Minister Narendra Modi on Saturday Finance minister Arun Jaitley and RBI governor Raghuram Rajan will also address bankers at the summit. Jayant Sinha, minister of state for finance called on the bankers to come up with bold and creative suggestions that could boost growth to a sustainable 7-8%.
Meanwhile, PTI quoted a senior finance ministry official as saying it was open to roping in professionals from the private sector to head state-owned financial institutions. “If the search committee recommends a candidate all such issues like higher compensation package can be looked at,” PTI quoted the official as saying.
At the conference bankers will attend a session on international best practices as also those of their private sector peers. “There is a wide disparity in the performance of public sector banks and private sector banks. There are many parameters on which the comparison is very striking,” Adhia said. Best practices of State Bank of India (SBI), Axis Bank, IDBI Bank, and Andhra Bank will be also shared in the sessions.
While Axis Bank’s mobile youth retail banking product will be discussed, SBI’s specialist cadre of IT talent in the bank will be shared among the bankers.
Balance sheets can be strengthened by creating a mechanism that can help them to access capital more easily, Adhia said, pointing out that mergers and acquisitions were not necessarily the only route to consolidation. “If we have to give better support to banks, if the banks have to play a complimentary role, can we think of some other structures by which it is easy for the banks to manage their affairs, it is easy for them to get capital from the market and it is easy for them to improve the balance sheets,” he said. According to RBI’s Financial Stability Report released recently, public sector banks (PSBs) continued to record the highest level of stressed advances at 12.9% of their total advances in September 2014 followed by private sector banks at 4.4%.