Banks Board Bureau chairman Vinod Rai, on Thursday, said that there was no harm in trying to cleanse the system and that demonetisation was one very effective way. “Any attempt to cleanse the economy is a very noble attempt and we should lend our energies in ensuring that process takes place,” he said, adding it was too early to say if it was a success or not.
In the course of delivering the 97th ASSOCHAM Foundation Day Lecture, Rai said that over the period of time banks may go in for mergers or consolidation. “A lot of work has to be done. Once the roadmap is ready, hopefully, it will be rolled out in the next two to three years,” he said.
The Banks Board Bureau chairman also disclosed that they were working to attract the best talent for the public banks. This, he said, included attractive compensation packages that would have bonus, employee stock ownership options, non-monetary perks etc at all management levels.
The Banks Board Bureau is in the process of filling up vacancies. “We are looking for the right people, and we are trying to ensure that we choose the best and not the second-best.”
“In some ways, the compensation packages for these public sector institutions need to be improved. Perhaps we are not able to do much with fixed part of compensation package, but we are certainly looking into the variable part. We are hopeful that by next financial year, we will be able to introduce a far more attractive package,” informed Rai.
But it does not stop with an attractive package. He said that they would introduce accountability into the system. A wholetime director or a CEO will be given a tenure, enough for them to be held accountable.“We are in the business of trying to collate people from different walks of life — those who will be willing to join boards of PSBs and be able to provide the kind of expertise which these banks have not had in the past. The effort is to ensure that these boards will run the banks.”
Rai said that though the corporate debt restructuring cell was created with very noble intentions in early 2000s, it later found itself sagging with humongous amount of stressed assets. He said that there have been innumerable cases where project reports were inflated, balance sheets manipulated and submitted, funds siphoned off and so on. On the other hand, there are an equal number of instances where irresponsible or lazy lending took place, due diligence was given the go-by and where supervision was callous.
"In the Banks Bureau, we are engaged with the task of trying to ensure that going forward, these incidents do not repeat. A project report needs to be scrutinised very effectively,” he said.