Sunday, 9 August,New Delhi: The government will soon set up a body, Banks Board Bureau (BBB), to recommend appointment of directors in public sector banks and advise on ways for raising funds and mergers and acquisitions to the lenders.
“We are working all the things, Bank Board Bureau, appointment of MD and CEO, all these things we are working on. Work is in progress. Things will happen soon,” Financial Services Secretary Hasmukh Adhia told PTI.
The Bureau is likely to be a six-member board comprising former CMDs of banks and financial services sector experts. It will be headed by Secretary, Department of Financial Services.
There are 22 state-owned banks in India including SBI, IDBI Bank and Bhartiya Mahila Bank.
Once in place, the Bureau will search and select heads of public sector banks and help them develop differentiated strategies of capital raising plans to innovative financial methods and instruments.
It would also be responsible for selection of non-executive chairman and non-official directors on the boards.
Besides, the body will also steer strategy discussion on consolidation based on the requirement.
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.
Finance Minister Arun Jaitley in his Budget speech this year had announced setting up of autonomous Banks Board Bureau for helping lenders raise capital for meeting expansion needs.
Public sector banks requires to raise Rs 1.10 lakh crore from the markets to meet more than half of their Rs 1.8 lakh crore capital requirement over for the next four years.
Of the Rs 1.80 lakh crore capital requirement estimated by the Finance Ministry, the government is going to provide Rs 70,000 crore — Rs 25,000 crore each in current and next fiscals and Rs 10,000 crore each in 2017-18 and 2018-19.
This estimate is based on credit growth rate of 12% for the current year and 12 to 15% for the next three years depending on the size of the bank and their growth ability.