Nirmala Sitharaman Press Conference: Bank Reforms announced
Finance Minister Nirmala Sitharaman unveiled major reforms in the banking sector.
Finance Minister Nirmala Sitharaman addressed her second press conference on the economic slowdown. She has announced another mega consolidation plan to provide a boost to the economy. She talked about the merger of banks as well as reforms in the banking sector.
According to the Finance Minister, the NPA has come down. This has come down to 7.90 lakh crores earlier it was 8.65 cr. She has informed that the benefits of 14 public sector banks have been increased. Biggest announce was that now Oriental Bank of Commerce and United Bank of India will merge with Punjab National Bank.
Merger of Banks
Finance Minister announced four mergers of PSU Banks in the press conference. After all mergers, India will now have 12 public sector banks - State Bank of India, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank, Bank of India, Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab and Sind Bank. These four Mergers are:
- Punjab National Bank + Oriental Bank of India + United Bank of India
- Canara Bank + Syndicate Bank
- Union Bank + Andhra Bank + Corporation Bank
- Indian Bank + Allahabad Bank
Other Announcements for Banking Sector
• FM Nirmala Sitharaman announced some other reforms in the banking sector. She said that the board committee of nationalised banks will appraise the performance of the General Manager and above-level employees.
• While speaking in a press conference, Nirmala Sitharaman said that the management committee loan sanction threshold has been enhanced to 100 percent.
• PSBs will recruit a chief risk offer from the market, at market-linked compensation.
• Large PSBs have also been given the flexibility to enhance the sitting fees of non-official directors on the board.
NPAs have come down
Finance Minister Nirmala Sitharaman announced that loan recovery is at a record high. She also said that gross NPAs have come down. She also said that selections for Banks Board Bureau are going to be professional, without any political interference.
Nirmala Sitharaman said that record levels of loan recovery have been reached due to the reforms implemented by the government. In FY19, there was a recovery of Rs 1.21 lakh crore compared with over Rs 77,000 crore in FY18, she said.
Capital Infusion for PSBs
Finance Minister Nirmala Sitharaman gave estimate numbers for the amount of capital that will be infused in state-run banks.
- Punjab National Bank: Rs 16,000 crore
- Union Bank of India: Rs 11,700 crore
- Bank of Baroda: Rs 7,000 crore
- Canara Bank: Rs 6,500 crore
- Indian Bank: Rs 2,500 crore
- Indian Overseas Bank: Rs 3,800 crore
- Central Bank of India: Rs 3,300 crore
- UCO Bank: Rs 2,100 crore
- United Bank: Rs 1,600 crore
- Punjab & Sind Bank: Rs 750 crore