Aug 2: Ravi Venkatesan, the outgoing chairman of Bank of Baroda, has opened up about the necessity for government to ease its grip over public sector banks. Addressing the issue of the bad debts weighing down the banks, Mr Venkatesan said that the government should ease its control so as to give banks the control over various decisions.
He opined that banks would be able to take several tough decisions if government eases its grip over the bank, which would prove to be helpful in becoming more stringent with regard to the bank loan issue. Additionally, this would also help banks to attract newer talent that would rival with that of private sector.
With regard to the competition faced by nationalized banks from the private sector, he said that consolidation was important to fortify the market share of public sector banks. However, he also pointed out that merging should only be implemented after individual banks are made strong, said reports.
According to him, India needs fewer, but better capitalized public-sector banks that are better run at the same time. Private banks accounted to around 70% of new deposits during the last fiscal. Private banks are also expected to corner around 80% of incremental loans by 2020 according to present scenario. This is also fuelled by the limitation of state banks caused in disbursing loans due to mounting debts that affects capital.
He also admitted that public sector banks are more prone to accidents systematically. The solution for banks in addressing this issue lies in self-reformation according to the 55 year old. The process, according to Venkatesan, should include further control of board like management hiring and strategy formations.
Venkatesan, who is a Harvard Business School alumnus, was hired from outside India’s banking network in 2015 as a part of Prime Minister Narendra Modi’s attempts to bring a major overhaul to the banking system in India. He was hired during the period along with Chief Executive Officer PS Jayakumar, both of whom had taken pay cuts to join Bank of Baroda.