Finance minister Arun Jaitley.
Finance minister Arun Jaitley.

Arun Jaitley says ‘carrot and stick’ approach effective in reforms

  • Jaitley says NDA government has eliminated discretion in decision making and adopted technology in a big way
  • A BCG-IBA report ranks Punjab National Bank the first among public sector banks in the implementation of ‘reforms agenda’

NEW DELHI : Finance minister Arun Jaitley said on Thursday the ‘carrot and stick’ approach adopted by the National Democratic Alliance (NDA) government has helped in delivering the goals of economic reforms and in shaping the society to be a more ethical one.

Addressing executives of state-run banks in the capital, Jaitley said that transparent reporting of bad debts, the new bankruptcy code and the laws banning parking of undisclosed assets abroad and those dealing with fugitive economic offenders have contributed to this shift in society. The minister also said that this was an imperative in India’s evolution to a developed economy. “The last five years will go down in the history as a defining point in India’s evolution as an ethical society," the minister said.

He was speaking at the release of a performance index of state-run banks prepared by Boston Consulting Group and Indian Banks’ Association.

The minister said that NDA government has eliminated discretion in decision making and adopted technology in a big way. “It had to be a combination of both carrot and stick… We had to bring those who thought could live in violation in perpetuity to some level of discipline. Now the message has gone home clearly," the minister said referring to the impact the bankruptcy code has in forcing corporate defaulters to pay back loans.

The BCG-IBA report ranked Punjab National Bank the first among public sector banks in the implementation of 'reforms agenda', followed by Bank of Baroda and State Bank of India. The ranking took into account parameters like customer responsiveness, credit off-take and digitalisation.

Fraud-hit PNB scored 78.4 out of 100 in the ‘enhanced access and service excellence-index. It was followed by Bank of Baroda, SBI, Oriental Bank of Commerce, Canara Bank and Syndicate Bank. Releasing the report, Jaitley said such rankings bring about competitiveness and encourages banks to perform better than peers.

PNB, which was involved in a 14,000 crore scam, reported profits in the December quarter after posting losses in the three previous quarters. Profit at the second-largest state-run bank rose 7.2% to 246.5 crore in the three months ended 31 December, from 230 crore a year earlier, Mint had reported on 5 February.

Department of financial services secretary Rajiv Kumar who was present on the occasion said the stress in the public sector banks have come down. The BCG-IBA report said that state-run banks have recovered 2.87 trillion between April 2015 and December 2018.

PTI contributed to this story.

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