Mission "Indradhanush"

Mission "Indradhanush"

Government launches mission "Indradhanush" , to revamp the functioning of Public Sector Banks. 

in order to revive the fortunes of public sector banks, government unveiled a seven-point plan encompassing Rs 20,000 crore immediate fund infusion, creation of a single holding company and minimising political interference.The government has named this as ‘Indradhanush’ that also includes setting up of a Bank Board Bureau (BBB) for broad-level appointments and a performance-based monitoring mechanism. 

The strategy, Indradhanush (rainbow), focuses on systemic changes in state-run lenders, including a fresh look at hiring, a comprehensive plan to de-stress bloated lenders, capital infusion, accountability incentives with higher rewards including Stock Options and cleaning up governance.

The 7 Elements includes:
1. Appointments

2. Bank of Board Bureau

3. Capitalization

4. De-Stressing Public Sector Banks

5. Empowerment

6. Framework of accountability

7. Governance Reforms

1. Appointments : Executives from the private sector have been hired to run state-owned banks with the government. 

2. Bank Board Bureau : The Bank Board Bureau will start functioning from the next financial year and is the first step toward a full-fledged bank holding company, an entity that will house the government's stake in state run banks struggling with mounting non-performing loans that have touched 6 per cent of gross advances. 

3. Capitalization : The government will inject a total of Rs 25,000 crore of capital into debt-laden state banks in this fiscal; Rs 20,000 crore would be injected in a month. Over the next four years, the government plans to inject Rs 70,000 crore.

4. De-stressing : The government will concentrate on distressing the banks’ bad loans. 

5. Empowerment : The government will strive to make it easier for PSBs to hire. The government is looking at introducing Employee Stock Ownership Plan (ESOPs) for the PSU bank managements. 

6. Framework of Accountability : The government also announced a new framework of key performance indicators for state-run lenders to boost efficiency in functioning while assuring them of independence in decision making on purely commercial considerations. 

7. Governance Reforms: The process of governance reforms started with “Gyan Sangam” - a conclave of PSBs and FIs organized at the beginning of 2015 in Pune which was attended by all stake-holders including Prime Minister, Finance Minister, MoS (Finance), Governor, RBI and CMDs of all PSBs and FIs. There was focus group discussion on six different topics which resulted in specific decisions on optimizing capital, digitizing processes, strengthening risk management, improving managerial performance and financial inclusion.