Finance Minister Nirmala Sitharaman on Thursday said the country needs big and world-class banks, and discussions are on with the Reserve Bank and lenders in this regard.
Finance Minister Nirmala Sitharaman on Tuesday allayed apprehension that privatisation of state-owned banks would hurt financial inclusion and national interest. She said the bank nationalisation done in 1969 has not yielded the desired result as far as financial inclusion was concerned.
In the biggest consolidation exercise in the banking space, the government on Friday announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017, a move aimed at making state-owned lenders global sized banks.
Central Bank of India's 21.5 per cent assets are either bad or have been restructured.
The move to make the appointment process more robust comes after last month's arrest of S K Jain, chairman and managing director of Syndicate Bank last month, over graft charges.
Addressing the 74th Annual General Meeting of the Indian Banks' Association (IBA), she said the industry needs to imagine how Indian banking has to be in the immediate and long-term future. As far as the long-term future is concerned, she said it is going to be largely driven by digitised processes and there is a need for seamless and interconnected digital systems for a sustainable future for the Indian banking industry.
The meeting is expected to chart a road map for cleaning up their balance sheets and boost credit flows, reports Somesh Jha.
State-run Bank of Baroda and Oriental Bank of Commerce are among those facing scrutiny.
For the first time, PSU banks will have a non-executive chairman, giving operational responsibility to managing director and chief executive officer.
As per the mega consolidation plan, Oriental Bank of Commerce and United Bank of India will merge into Punjab National Bank (PNB); Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank. Following this merger, PNB will become second largest after the SBI, Canara Bank fourth, Union Bank of India fifth and Indian Bank seventh biggest public sector lender.
The government has already announced infusion of Rs 10,086 crore in Bank of India, Rs 5,500 crore in Oriental Bank of Commerce and Rs 2,159 in United Bank of India.
The finance ministry on Wednesday allowed all private sector banks to participate in government-related business, like collection of taxes. pension payments and small savings schemes. At the moment, only few large private sector are allowed to conduct government-related business.
After removing three PSBs - BoI, Mahabank and OBC from the framework, RBI, on Tuesday, took out three commercial banks - Allahabad, Corporation and Dhanlaxmi from the said list.
All transfers and promotions for next financial year will be decided by respective banks, not by the merged entity.
The Reserve Bank has asked the public to pay their income tax dues well in advance so as to avoid standing in long queues and stated that 29 agency banks are also authorised to accept such payments.
Finance secretary Rajiv Kumar was positive in formation of a committee consisting all concerned to address the issues arising out of the proposed merger of 10 banks including preserving the identity of all the banks.
Amendments would be required in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 for privatisation, sources said.
Amid slowdown blues, the government has unveiled a raft of measures over the past few months aimed at improving liquidity in the system, moderating interest rates as well as credit growth apart from addressing stress in the NBFC sector.
Out of these seven PSBs, Bank of India is likely to get the highest amount of Rs 10,086 crore, followed by Oriental Bank of Commerce, which might get Rs 5,500 crore through recapitalisation bonds
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After scrapping the selection of six UPA-appointed bank chiefs, the government has now decided to make significant changes to the selection process.
Bank unions - officers and workmen - had buried their differences and sat across the table on August 29 to work out a fresh deal with the IBA involving a 20 per cent wage hike.
The probe into selections for banks such as Bank of Baroda and Canara Bank followed the arrest of Syndicate Bank CMD S K Jain for alleged graft.
PNB reported the maximum number of such frauds.
The post of chairman and managing director has been split and the government has appointed managing directors and chief executive officers in four banks -- Indian Overseas Bank, United Bank of India, Oriental Bank of Commerce and Vijaya Bank.
Banks are also weighing the option of hiring experts for help in specialised areas.
Among other demands, the unions are also seeking immediate introduction of five-day week in full and reduction of cash transaction hours and regulated working hours.
The country's largest lender State Bank of India will get the largest sum of Rs 8,800 crore as government's capital infusion.
The regulatory actions, undertaken by the RBI and the government, came hours after finance ministry sources confirmed that SBI was directed to bail out the troubled lender. For the next month, Yes Bank will led by the RBI-appointed administrator Prashant Kumar, an ex-chief financial officer of SBI.
PNB has rich experience in the integration of commercial banks.
Govt renews search for five PSU bank chiefs; norms relaxed.
Even under the RTI response, all public sectors banks have washed their hands of any responsibility.
RBI may be inclined to impose severe restrictions on lending in the coming quarters.
Of the total 53,334 cases of frauds reported during 2008-09 and 2018-19 fiscal years, involving a whopping Rs 2.05 lakh crore, a highest of 6,811 cases were reported by the ICICI Bank.
'Investors should not commit fresh money to these stocks right now, unless they can hold for the next three to four years.'
The combined market capitalisation of the 21 listed PSU banks declined by about Rs 76,000 crore to Rs 425,800 crore during the month.
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With new private banks in the play, the going could become more difficult for the old-school state-run banks, already losing business and market position, forcing them to think hard towards consolidating and forming larger entities to garner big-ticket deals.
Its obsession for growth, chasing corporate clients and giving up its original mandate of meeting the needs of local trade and businesses. A quarter of its loan book has gone bad. That's an error of business strategy, points out Tamal Bandyopadhyay.
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