Page 5 - Banking Finance October 2019

BANK UPDATE

BANKING

NEWS
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NEWS
NEWS
NEWS

United Bank, PNB, OBC Central banks reducing dependence; diversifying into

look for merging by April gold
In an aim of minimizing hardships to According to RBI, Central banks are diversifying into gold and reducing depen-
customers, the dence on the dollar as a reserve currency. “The recent
board of Punjab expansion in gold holding has been driven mainly by
National Bank emerging market economies (EMEs), attributed to the
(PNB) is looking general increase in the level of reserves in the after-
at an April dead- math of GFC, diversification strategy that moved away
line for complet- from the dollar, and the use of gold as an alternative
ing the process in order to create the asset by those countries on which economic sanctions have been imposed,” the
country's second largest bank. central bank said. In terms of gold purchase, the top five countries are — Rus-
sia, China, Kazakhstan, Turkey and India.
According to a senior bank execu-
tive, the board of OBC, which will The RBI had also said that during the year under review, foreign exchange re-
merge with PNB, is expected to serves increased by 5.9% in June 2019 as against an increase of 5% in the cor-
meet around October 18 to give an responding period of the previous year, and gold was added to the reserves in
in-principle approval to the marriage line with the broad diversification objectives, the central bank informed.
arranged by the government.
Centre to reform PSBs boards
Cheque books and account numbers
and some of the other details for The Government of India has taken a step ahead in order to reform the boards
customers will change post-merger, of public sector banks (PSBs). However, it fell short of giving up control over the
along with a new name and logo for top management appointment, which is considered to be the key to efficient
the merged entity, sources said. PNB functioning of PSBs.
may provide a six month grace pe- Finance Minister Nirmala Sitharaman declared a host of measures aimed at
riod for customers to revalidate their making PSBs more efficient. These included allowing banks’ boards to appraise
standing instructions and also issue the performance of the senior management —from the level of general man-
new post-dated cheques in case the ager to managing director (MD). Under current practice, general managers
need arises. are appraised by executive directors, who are assessed by the MD. But there is
The managing directors of the three no formal appraisal process for the MD.
banks are expected to jointly ad- At the end of every financial year, the MD signs a memorandum of understand-
dress employees and customers in ing (MoU) with the government. After a full year, MoU points are scored, and
the coming weeks to allay any fears, based on the scores, the bonuses of the MD are released by the board. The
they added. government now proposes that the board can appraise the MD directly.

BANKING FINANCE | OCTOBER | 2019 | 5