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India has brought in private sector executives to run two of its largest state-owned banks, the first such appointments and part of a bold reform plan aimed at shaking up the country's dominant but bloated and often inefficient government lenders.
The two were named after the government earlier this year announced steps to overhaul the banking sector, including the appointment of five new chief executives, with applications welcome from both public and private sector candidates.
India had previously always picked heads for those lenders from within the state sector, which accounts for more than 70 percent of the country's banking assets but has lagged private-sector rivals in profitability and has amassed bad loans at a faster pace.
The government on Friday named Rakesh Sharma, head of private sector lender Laxmi Vilas Bank, as chief executive of Canara Bank Ltd, and appointed P S Jayakumar, chief executive of real estate developer VBHC Value Homes Pvt Ltd, as head of Bank of Baroda.
It also named bosses for Bank of India, IDBI Bank Ltd and Punjab National Bank from within the state sector.
The appointments could help the banks improve governance and boost earnings, important measures as they prepare to tap the markets for capital to boost their balance sheets.
The finance ministry also reiterated its plans to provide public sector banks with Rs 250 billion ($3.9 billion) each in the current and next fiscal year, while Rs 20,000 crore (Rs 200 billion) would be provided during 2017-18 and 2018-19.
Illustration: Uttam Ghosh/Rediff.com
