FM Nirmala Sitharaman Press Conference LIVE: 2nd instalment of revival measures focus on banking sector

FM Nirmala Sitharaman is addressing the press to give updates on the second instalment of revival measures amid the economic slowdown.

Aug 30, 2019 10:08 IST India Infoline News Service

Nirmala Sitharaman

In continuation with last week's reform announcements, FM Nirmala Sitharaman is addressing the press to give updates on the second instalment of revival measures amid the economic slowdown.

The FM gave a background of recent reforms in the banking and financial sector. 

  • Credit enhancement will be focus for India to be Rs5tn economy.
  • 72% of GDP is credit availability; Rs1.9tn.
  • Focus on strong governance model.
  • Gross NPAs fell to Rs7.90 lakh cr from Rs8.65 lakh cr showing asset quality improvement
  • PSBs saw enhanced profitability - of total 18 PSBs, 6 showed profitability in Q4FY19. Now, 14 are profitable in Q1FY19.
  • Impact of BoB, Vijaya Bank, and Dena Bank has led to rationalized operations, wider offerings, core function improvement, no retrenchments - best practices replicated.
  • Merged entity saw CASA growth of 6.9% yoy in Jun'19 & better profitability.

    Consolidation into NextGen Banks: 
  • Aim to raise capacity to increase credit, strong presence, and global reach and unlock potential with consolidation.
  • Oriental Bank of Commerce, Punjab National Bank, United Bank - to be merged into one entity to make 2nd largest PSB in the India - business of Rs1.75 lakh cr with a total of 11.437 branches.
  • Canara Bank + Syndicate Bank to be merged to become 4th largest PSB, with a business of Rs15.20 lakh cr. 
  • Union Bank of India + Andhra Bank + Corporation Bank to become 5th largest PSB. There will be large cost reduction due to potential network overlap.
  • Indian Bank + Allahabad Bank to make 7th largest PSB with business of Rs8.08 lakh cr. 
  • 82% of all PSB business with these merged entities.
  • Bank of India and Central Bank of India will continue as individual entities and operate as national banks.
  • Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab and Sindh Bank will also continue to operate on their own as regional banks.
  • 27 banks in 2017 to 12 banks now will help provide support to make it a Rs5tn economy.

    PSB Governance Reforms
  • PSB boards to be empowered 
  • Post mergers, boards can introduce CGM level as per needs
  • Allowing recruitment Chief Risk Officer from market at market-based compensation
  • Boards to decide on succession plan
  • Large PSB boards to enhance sitting fees of non-official directors
  • Longer terms for directors on management committee boards (MCBs)
  • MCB loan sanction thresholds enhanced 100% for focused attention on high value loan proposals.

    Capital infusion to enhance growth of PSBs (approx.)
  • PNB - Rs16,000cr
  • Union Bank of India - Rs11,700cr
  • BoB - Rs7,000cr
  • Canara Bank - Rs6,500cr
  • Indian Bank - Rs2,500cr
  • Indian Overseas Bank Rs3,800cr
  • Central Bank of India Rs3,300cr
  • UCO Bank - Rs1,600cr
  • United Bank of India - Rs1,600cr
  • Punjab & Sind Bank - Rs750cr

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