The Indian Banks Association (IBA) is examining the possibility of a common technology platform for all public sector banks in order to achieve economies of scale and make the banking sector customer friendly.
By George Mathew
A working group on technology will identify the common processes to be digitised, including MIS (management information system). The Ministry of Finance which favours a common technology platform for all public sector banks, discussed the issue in a recent meeting with CMDs of banks.
Industry sources point out that the ministry is keen on a common tech plat form as it wants to pursue the issue of consolidation among the PSBs. “Though government wants to pursue the consolidation agenda seriously among the PSBs, it is likely to run into problems as issues like organisation integration, culture and systems and info technology platform integration pose formidable problem,” said the CMD of a PSB who attended the meeting .
The government has also asked banks and insurers to develop a common infotech module by June, to launch three new social security schemes — Atal Pension Yojana (pension), the Pradhan Mantri Suraksha Bima Yojana (non-life cover) and the Pradhan Mantri Jeeven Jyoti Bima Yojana (life cover) — announced in the last Union Budget.
According to a Finance Ministry note, these three schemes would be implemented through banks in collaboration with state-run insurance firms and the Pension Fund Regulatory and Development Authority (PFRDA) since participation in these schemes would be possible only through bank accounts and auto-debit instruction by subscribers. The three new schemes would be integrated with the core banking system used by the lenders in order to provide a single-point enrollment of schemes in a seamless manner and substantial enrollment of subscribers, the note said.
Meanwhile, the finance ministry has finalised the structure of the proposed Bank Board Bureau (BBB) which will select the top officials of public sector banks.
BBB will be an autonomous body aimed at improving “the governance of public sector banks”. “The board would be a six-member body in which five would be professionals from banking, management and other relevant fields. Secretary (Financial Services) would be the only representative from the government on the board,” says a Finance Ministry note.
“The BBB will be a part-time board with a permanent secretariat. It will select whole time directors, non-official directors and non-executive chairman of the public sector banks. It would also take up functions of advice regarding strategy/capital planning after it stabilises other functions,” the Ministry note said. It says Secretary (Financial Services) “solicited the opinion of PSU bank chiefs and all of them welcomed the move”.
The government had earlier indicated that BBB would be an interim step towards moving in the direction of having a Bank Investment Company.