Apart from the major rejig, the government has also directed RBI to ask banks to initiate proceedings to recover bad debts and suggested measures to overcome the Non-Performing Assets (NPA) crisis.
In a major restructuring in the PSU banking space, the government on Friday appointed heads of various public sector banks besides carrying out rejigs at PNB and Bank of India.
PNB Managing Director Usha Ananthasubramanian has been shifted to relatively small Kolkata-based Allahabad Bank while head of Bank of India (BoI) Melwyn Rego will move to Syndicate Bank with immediate effect, according to an official statement.
According to experts, the changes were made in these two public sector banks after a similar rejig at IDBI Bank because of their non-performance in tackling non-performing assets (NPAs).
However, a senior finance ministry official said two changes have been made because the Department of Financial Services wanted to give longer tenure to heads of these two large banks.
Last month, NPA-laden public sector lender IDBI Bank head Kishor P Kharat was shifted to Indian Bank. Mahesh Kumar Jain of Indian Bank was shifted to IDBI Bank.
Appointments Committee of the Cabinet (ACC), headed by Prime Minister Narendra Modi, appointed Rajkiran Rai G, currently executive director of Oriental Bank of Commerce as MD and CEO of Union Bank of India for a period of three years.
It is extendable up to May 2022 after review of his performance, the official statement said. Besides, R Subramaniakumar, currently executive director of Indian Overseas Bank, has been elevated to MD and CEO.
Sunil Mehta, currently executive director in Corporation Bank, will head the country's second largest public sector bank PNB in place of Ananthasubramanian who has been shifted.
Executive director of Canara Bank Dinabandhu Mohapatra has been promoted as MD and CEO of Bank of India. At the same time, ACC appointed R A Sankara Narayanan, executive director of BoI as MD and CEO of Vijaya Bank.
Earlier in the day, the government empowered RBI to ask banks to initiate insolvency proceedings to recover bad loans, amounting to over Rs 6 lakh crore in case of state-owned lenders alone, and promised more measures to resolve the NPA crisis.
Toxic loans of public sector banks (PSBs) rose by over Rs 1 lakh crore to Rs 6.06 lakh crore during April-December of 2016-17, the bulk of which came from power, steel, road infrastructure and textile sectors.
Gross NPA of PSBs nearly doubled to Rs 5.02 lakh crore at the end of March 2016, up from Rs 2.67 lakh crore at the end of March 2015.
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