Mumbai: Most bankers who attended the two-day Gyan Sangam retreat, held in Pune in January, were relieved when they left for home.
While the government, which organised the retreat, steered clear of making any immediate decisions, Prime Minister Narendra Modi and finance minister Arun Jaitley had listened carefully to the multiple problems plaguing the public sector banks in India and what could be the best way to solve them.
While delivering his closing comments to the bankers at the retreat, Modi did make one major promise, that there would be no interference or unnecessary phone calls from the government in the internal decision-making process of banks.
Six months later, in July, the department of financial services (DFS) has lived up to the government’s promise, according to a report by The Economic Times on Monday. In a letter circulated among ministries, it was stated that to set up a meeting with the chairman of a bank or any other official from a financial services institution, the ministry would have to go through the DFS.
It isn’t just about a few phone calls. The two-day retreat in Pune saw multiple issues being discussed between bankers and representatives of the government. Issues ranging from swift appointment of top management in headless banks, to application of the recommendations from the P.J. Nayak committee report about setting up a bank investment committee, where the government can transfer its majority ownership of state-owned banks.
In the six months which followed, not many of these issues have moved quickly.
At several banks, the process of selecting chiefs is still underway. The DFS is currently in the process of appointing chief executives for Punjab National Bank, Bank of Baroda, Bank of India, Canara Bank and IDBI Bank.
In March, the government said it would set up an autonomous bank boards bureau within four months to recommend top appointments at state-owned banks and also to guide these banks on their strategies. Little details have emerged on how quickly this structure will be operational.
Meanwhile, the government is still struggling to come up with a comprehensive plan to recapitalize state-run banks that need capital. While a number of banks made a pitch for more capital in June, the government is still to give a clear idea on the criteria on which additional capital will be allocated.
One of the key pitches of the National Democratic Alliance government has been that it is a quick decision-making government, something the previous government was not. But now and then come instances which show that a change in government does not necessarily translate to change in ground realities.