Raghuram Rajan's 9 point suggestion for Public Sector banks

Reserve Bank of India (RBI) Governor Raghuram Rajan has given a 9 point mantra to rejuvenate the future of public sector banks. According to Rajan, public sector banks have tremendous resources which must be used in the right way.

Rajan was speaking at a banking conference organised by the Federation of Indian Chambers of Commerce and Industry (FICCI)in Mumbai on Monday. He said the RBI had commissioned the Nayak report, and the bank is in dialogue with the government for implementation.

Here are nine suggestions that Rajan said would need to be implemented for PSU banks:

1. Public Sector banks must first be independent to make commercial decisions. Social mandates or obligations have to be backed by financial gains, but for any project   one must take into account the bank's societal profit or loss

2. The position of CEO and chairman has to be separated to put a process of check and balance,

3. The length of CEO tenures must go up as that would help them take better strategic decisions,

4. The appointment of the CEO or chairman has to be more transparent, and based only on merit,

5. Boards of banks have to be more empowered to hold the bank management accountable,

6. Regulatory hassles of everyday banking must be reduced. The board must have enough time to do important work and not exist just to tick boxes,

7. Compensation of bank boards must be improved and revised to ensure that the very best people can be brought on the board,

8. Human resource development is a central challenge. There is a gap in middle-level management which has to be addressed through lateral hiring, better training etc. This is essential for public sector banks,

9. Use of technology must be increased to make banking easier and improve efficiency of the banks.