Banks Board Bureau has role with a holding company

Banks Board Bureau has role with a holding company

Banks Board Bureau chairman Vinod Rai is right to be miffed(इस बात से नाराज) with the government for ignoring its recommendations(सिफारिशें/प्रशंसा) to reform public sector banks. The BBB must be empowered(सशक्त), now that the government has clarified that it will not scrap the autonomous body. Its original mandate(शासनादेश/अधिकृत पत्र) was “to prepare PSBs to take on competition(प्रतियोगिता), have the ability to appropriately(उचित रूप से/उपयुक्‍तता से) manage and price risk across business cycles and develop resilience(लचीलापन/पलटाव) to generate internal capital”. However, the performance of PSBs, that are reeling under a pile a bad loans and now scams, is fragile(नाजुक/सुकुमार )compared to their private sector peers(साथियों). Fixing their governance ills calls for broader systemic reforms. This requires ring-fencing PSBs against untoward political interference and meddling, as recommended earlier by the PJ Nayak committee.

The thing to do for the Centre to create a company to hold PSB equity(न्यायनीति/निष्पक्षता), appoint BBB as its board and leave it to appoint PSB boards, while also changing the law to give the RBI the same regulatory powers over PSBs as it has over private banks. It should appoint board members — people of proven integrity(सत्यनिष्ठा/प्रामाणिकता) and competence(क्षमता/योग्यता) — of each and every public sector bank. This will cut out political and bureaucratic(नौकरशाही/सत्तावाद) meddling(दखल/हस्तक्षेप करना)in appointments. The holding company structure will also strengthen both functional and operational autonomy, even while the government retains a majority stake(बहुमत हिस्सेदारी) in the equity of the holding company. Reportedly, the BBB has recommended de-linking compensation(मुआवजा/क्षतिपूर्ति) of bankers from those of civil servants.This makes eminent(प्रख्यात/श्रेष्ठ) sense. The remuneration(पारिश्रमिक/पुरस्कार) structure of senior bankers must be performance-linked, and comparable(तुलनीय) to what private sector counterparts earn. Pay should be multi-tiered, a reasonable base salary made attractive by variable(अस्थायी/परिवर्तनीय) chunks(हिस्सा/टुकड़ा) linked to bank performance over time, the variable bonuses being subject to clawback. This would incentivise them to take commercial decisions and function independently. Such reform calls for overhaul of public sector banks beyond listening to the wise men of the BBB.

 

 

Important Vocabulary

1.Resilience(लचीलापन/पलटाव)
Synonyms:flexibility, pliancy, recoil, snap

2.Fragile(नाजुक/सुकुमार )
Synonyms: delicate, feeble, frail, weak, brittle
Antonyms: able, firm, healthy, strong, durable

3.Integrity(सत्यनिष्ठा/प्रामाणिकता)
Synonyms: honesty, principle, probity, purity, rectitude
Antonyms: deceit, dishonesty, corruption, disgrace, dishonor

4.Meddling(दखल/हस्तक्षेप करना)
Synonyms: interference, interrupting, meddlesomeness, nosiness, prying

5.Competence(क्षमता/योग्यता)
Synonyms: appropriateness, capability, capacity, competency, expertise
Antonyms: ignorance, impotence, inability, inappropriateness, incompetence

6.Eminent(प्रख्यात/श्रेष्ठ)
Synonyms: big-name, distinguished, esteemed, famed, high-ranking
Antonyms: common, inconspicuous, inferior, insignificant, obscure

7.Remuneration(पारिश्रमिक/पुरस्कार)
Synonyms: compensation, commission, pay, reimbursement, reward

8.Chunks(हिस्सा/टुकड़ा)
Synonyms: block, dollop, hunk, lump, piece
Antonyms: whole

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