Financial Daily from THE HINDU group of publications
Monday, May 15, 2006
Financial Daily from THE HINDU group of publications Monday, May 15, 2006 |
|
|
|
|
|
|
|
Home Page
-
Public Sector Banks Money & Banking - Financial Policy Govt may drop plan to set up authority for revamp of weak PSBs K.R. Srivats
Guardian watchdog Centre will consult RBI in matter of appointment Panel to assist administrator in discharge of duties Period of supersession not to exceed 6 months
New Delhi , May 14 The Centre is likely to drop its earlier plans to establish a financial restructuring authority for revamping or restructuring of any weak or potentially weak public sector banks. It may, instead, go with the Reserve Bank of India suggestion of appointing an administrator to take charge of the board of the public sector bank that has been superseded or dismissed. A system of appointing administrators for public sector banks is also expected to bring uniformity in contents, approach and legal provisions with regard to supersession of boards of public, private, and co-operative banks. Currently, the legislations governing nationalised banks do not provide any mechanism regarding supersession of board of directors of such banks. It was felt that a mechanism for supersession might be necessary in case of weak or potentially weak banks. For this purpose, the Banking Companies (acquisition and transfer of undertakings) and Financial Institutions Laws (amendment) Bill 2005, introduced in the Lok Sabha in August 2005, sought to empower the Central Government to supersede the board of directors of any nationalised bank and constitute a financial restructuring authority and appoint a CEO of such bank. This Bill was referred to the Standing Committee on Finance in August 2005. The report of the Standing Committee was tabled in the Lok Sabha recently. The Finance Ministry has, however, in its submissions to the Standing Committee on Finance, stated that there was no need for an authority exclusively for restructuring of weak banks. Moreover, as of now, all the public sector banks have been faring well and there is no immediate concern as to weakness of public sector banks. It was also felt that the Act should provide enabling provision to supersede the board of directors in extreme exigencies. The Finance Ministry indicated that it would go with the RBI suggestion of having a system of administrators for public sector banks. It has also accepted the proposal to have a mandatory system of consultation with the RBI in the matter of appointment of administrator and related authorities. As per the RBI suggestion on supersession of board of directors, the Centre will appoint an administrator and a committee to assist the administrator in the discharge of duties. The committee will consist of three or more persons with experience in law, finance, banking administration, or accountancy. Moreover, the period of supersession should not exceed six months (at the most 12 months) as against 3-5 years proposed in the Bill considered by the Standing Committee on Finance.
More Stories on : Public Sector Banks | Financial Policy | Regulatory Bodies & Rulings
Article E-Mail :: Comment :: Syndication :: Printer Friendly Page
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |
Copyright © 2006, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|