With their private sector brethren having significant competitive edge in terms of rewarding employees and technology, the government is now trying to make sure that public sector banks do not lag behind in any way possible.
Seeking to usher in more professionalism and ensuring that employees and board of directors of public sector banks and regional rural banks work in the most effective manner, the Finance Ministry has issued guidelines that the banks will be required to comply with.
From devising an annual reward system for best performers in a circle/zonal office to every board of directors meeting having a Board Reporting Financial System as an important agenda item, the norms cover a range of issues.
In a letter to chief executives of all PSBs last week, the Department of Financial Services has said that there is a need to review performance of circle/regional offices on regular basis.
“The budgetary target allocation and quarterly performance review should be meticulously followed. A report on said quarterly review be placed before the board. The performance of all functionaries with budgetary responsibility should be reflected in their Annual Performance Appraisal Report,” it said.
Stressing on the role of board of directors, the department has asked PSBs to have one meeting every quarter that will have on its agenda an action plan on strategic business including products and markets, core business operations, human resources and succession planning, risk and managing non-performing assets.
“One of the most important agenda item for every board meeting must be the Board Financial Reporting System which gives highlights of the financial progress, and key metrics like NPAs, customer acquisition and diversification progress of key initiatives, action taken on the action plan for key priorities, comparison of performance with plan/budget,” the letter added.
In view of the large number of reporting items prescribed by the RBI, the department has also suggested that it would be better if most of these items are delegated to the Management Committee for review and report of the Management Committee is placed before the board on a quarterly basis.