Important Points to Know about Mission Indradhanush:
Important points that we have to know about Mission Indradhanush was given here, which will be more helpful for the candidates those who are preparing for the upcoming exams.
Government has launched the Mission Indradhanush to Revamp PSBs:
Finance Minister Arun Jaitley has launched a seven pronged plan-Indradhanush to revamp functioning of public sector banks (PSBs) which was termedMission Indradhanush. The seven elements for the Indradhanush mission are,
– Board of Bureau
– Framework of accountability
– Governance reforms.
· The government has planned to operationalise aBank Board Bureau (BBB), vested with the powers of board and top-level appointments and advisory role on PSB strategies by Apr 2016.
· Banks Board of Bureau will replace the existing appointments boards. Its members would be appointed in the next six months to be headed by the RBI Governor.
· Banks Board of Bureau will also hold the bad assets of public sector banks
· The BBB will comprise a chairperson (either a retired banker or a regulator or an eminent businessperson), three government officials including the financial services secretary and a deputy governor of the RBI and three professionals from the private sector.
· The BBB would be an interim arrangement and a holding company of government stakes would supersede it.
· The single holding company holding all the government shares in the PSBs being proposed was suggested by thePJ Nayak committee and has the backing of all PSBs.
· Of the total proposed capital infusion ofRs. 70,000cr till FY 19, Rs. 20,088 cr will be infused in 13 banks in a month, with State Bank of India (Rs. 5,531 cr), Bank of India (Rs.2,455 cr) and IDBI Bank (Rs. 2,229 cr) getting the most.
· The government reckons greater professional autonomy coupled with the solutions to problems faced by sectors that contributed the most to PSBs’ stressed assets – steel, power (including discoms), highways and sugar – would enable the banks to raise capital as and when needed from the market.
· It is estimated that for keeping a safe buffer of capital over the Basel III norms and in keeping with the credit growth estimate of 12-15% over the next three years. PSBs would needRs. 1.8 lakh cr as additional capital till FY 19.
· PSBs’ gross non-performing assets (NPAs) stood at 6% of advances at the end of Jun while another 8% was classified as standard restructured assets.
· The government also proposed to professionalise management of the boards through a transparent process of selecting the best available talent, incentivizing top management through employee stock options and performance-linked bonuses.
· To differentiate the poorly performing banks from the better ones, the government has introduced a new framework ofkey performance indicators (KPI), including those on efficiency of capital use (return on assets and return on equity), NPA management, financial inclusion, growth and diversification of business as well as certain qualitative parameters such as external credit rating, asset quality improvement, capital conservation and HR initiatives.
· Capital infusion from the third tranche of Rs. 5,000 cr to be released in the fourth quarter of this year would be as per the KPI parameters.
· The plan lacks an explicit formula for reducing bad loans, consolidation or timeline to lower government stakes to the 52% threshold.
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