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BANKING REFORMS - PSBs (Standing committee recommendations (questioned…
BANKING REFORMS - PSBs
Need for Banking reforms
Human resource problem
senior employees retiring over the next five years and 95% - general manager level will be out of the door by 2019-20
focused - symptoms of India’s banking crises, rather - structural and operational weaknesses
Reserve Bank of India’s (RBI) two previous projects - 2015 Asset Quality Review (AQR) - discovery and recognition of non-performing loans (NPL) other - Insolvency and Bankruptcy Code of 2016- resolution of bad loans ,
neither - corrected the underlying problems with risk controls, management, and supervision at public-sector banks result - faced crisis after crisis - banking sector
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Reforms
loosening the policy - encourage more applicants for the formation of banks. EXAMPLE - reduce minimum equity threshold , remove - applicants be Indian residents - demand - banks open twenty-five percent of their branches in unbanked areas
reduce the obligation for new banks - priority sector lending targets as all scheduled commercial banks
introducing new banks - reduce systemic risk that arises from public sector banks’ current dominance of total lending. The role of state-directed lending can then be limited to advancing financial inclusion objectives
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Issuing licenses to new domestic and foreign banks - bring new talent - facilitate knowledge transfer - alleviate human capital shortage
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