A recent press report said that the Finance Ministry has planned to infuse Rs. 10, 000 to Rs. 20, 000 crore into the public sector banks in order to reinforce them and hence the ministry also wanted the banks to work more efficiently to earn high returns.
Mr. D.K. Mittal told that the executive level officers of public sector banks are being posted in regional headquarters or the central headquarters. These officers must be posted in the branches in order to deal with the customers personally and ensure more deposits and disbursement of loans. This restructuring of staffing policy would enable the public sector banks to compete with the private sector banks such as HDFC and ICICI.
Mr. Mittal also said that the Finance Ministry would closely monitor the performance of the public sector banks as they infuse large amount of money into these banks. The efficiency of the banks would be judged taking into account various parameters such as the rate of interest in the current account and savings account (CASA). The interest paid by banks on the CASA would be low and hence these accounts seem to be the cheapest means of earning funds for the banks.
The Ministry would also keenly observe the Reserve Bank of India’s rating of the public sector banks to evaluate the banks. The RBI rating is done on the CAMELS parameters that include capital, assets quality, management, earnings, liquidity and systems and controls.