A recent press report said that the finance ministry has asked all PSU banks to hold board meeting for two consecutive quarters in New Delhi.
As per reports one of the main reasons for the meeting is the ministry’s keenness to ensure that one of its officials, Mr. D.K. Mittal, secretary – financial services, is present at all the meetings. The instruction was received by banks early this week.
The banks feel that it would help finance ministry to closely assess the performance of each bank and also Mr. Mittal, would address the boards to convey his views and the government’s expectations from each bank.
Reports also said that the senior bankers fear that this could lead to excessive interference and micro management. The RBI has recently increased its key policy rate by 25 basis points (bps), the 12th such hike since March 2010, due to high inflation continues, despite signs that economic activity is slowing down in the world’s second fastest growing major economy. This has made the home loan and other loans dearer to the new and existing borrowers.