Banking – Policy Reset .

The Rising India Party proposes the following Policy Set as an evolving document involving continuous public engagement and over sight:

  1. The government would take steps to convert all Public-Sector Banks into genuinely Public held ones, over total privatization, through the moves set out below.
  2. The government would begin this process by divesting 95% of its share to the wider public.
  3. The move would be within the proviso that no single entity in any combination of associations or sister companies can acquire more than a 5% stake in the concerned entry with a limit of no more that 5 entities who can own that percentage, 5% would remain with the government leaving 65% with the small individual investor, with share-holding caps.
  4. This would virtually guarantee spreading of wealth in a larger number of people and huge public engagement with its intuition.
  5. The government would consider a law that would make every depositor automatically a share-holder set to predefined terms that may be based on floating share allotments of a specified class, say ‘Depositor shares” and based on average balance or other suitable parameter, etc.
  6. The management of these entities would rest with the private sector entities with profit sharing rights, and guaranteed base return on top of expenses incurred etc. would be granted on the basis of bids, with preference for letting the 5% stake holders, individually or in any combination, taking the management positon, thus creating a substantive shareholding positon and seats on the Board.
  7. Such a model would keep Public sector banks within the Public sector spreading wealth and creating a counter narrative to private banks forcing them to behave better, even while allowing the management to be in private hands thus injecting efficiencies and competition across the board.
  8. These arrangements would be in five year renewable blocks in the interest of ensuring efficiency and profitability of the entity in question.
  9. These banks would perforce need to lend to the SME sector based on strong in-house enterprise assessment staff using all available data as to market, pricing etc. to pass the viability of the project in question.
  10. The banks would invest in financing large projects with up to 50% of available funds, and especially participate in critical industries in consultation with the government in place at a given point of time.
  11. Key strategic projects would be underwritten or guaranteed by the government.
  12. Both Private and Public-Sector Banks would be free on deciding their individual functioning policy, strategies, products on offer etc. within the proviso of maintaining profitability and accountability to the shareholders
  13. All Indian banks will be given permission to enable them setting up overseas and off shore operations, as branches or locally incorporated entities with suitable inter functioning agreements within permissible laws.

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