Revamp Of Bank Board Bureau In The Backdrop Of Rising NPAs
Bank Board Bureau was constituted as one of the components of Mission Indradhanush which is based on recommendations of P J Nayak Committee. The Bank Board Bureau was setup as an autonomous body by the central government to improve credit culture in India and aims to address rising cases of Non-Performing Assets (NPAs) (termed as the “twin balance sheet problem” in the Economic Survey).
Components of Mission Indradhanush
- De-stressing PSBs and the infrastructure sector
- Capitalization, to meet BASEL- III norms
- Institutional Empowerment
- Framework Accountability
- Governance reforms in PSBs
- Banks Board Bureau
- Appointments, separation of posts of CEO and MD of banks
Functions of Bank Board Bureau
- Improving the governance of Public Sector Banks
- Recommending selection of chiefs of government owned banks and financial institutions
- Recognizing NPAs and wilful defaulters
- Helpingresolve and recover value from stressed accounts
- Developing innovative strategies to raise capital
- Guide banks on mergers and consolidations of stressed banks.
- Guide in rationalization and consolidation of foreign operations of Public Sector banks
- Help PSBs mobilize their non-core assets to strengthen their capital base
- Recognize fraud detection and initiate action in respect of NPAs
Way Forward
- Clear mandate and independent functioning of Bank Board Bureau needs to be ensured.
- Non-interference of government in the selection process of heads of financial institutions
- Provide constitutional backing as well as institutional autonomy to solve rising cases of NPAs
- Ensure mergers and acquisitions of loss making PSBs
- Policy and structural issues of PSBs needs to be resolved
