Finance Minister of India Mr. Arun Jaitley has indicated that the Government may merge 27 public sector banks into just six. Because PSB is working under pressure to tackle their dismal bad loan scenario and consolidation is the way forward to handle this situation. This has been said in the recently held Gyan Sangam in Gurgaon.
The time frame for the mergers will ensure there are no disruptions, the sources said. Because the banks are already short-staffed so downsizing would not be required. Apart from that an official from Ministry stated that an expert committee will be soon to setup to look into the issue and the committee will also work closely with the Banks Board Bureau (BBB) to identify the right matches for consolidation.
From April 1, 2016 the BBB will independently oversee consolidation and chalk out business plans for public sector banks. Since it is not feasible to bring down the government’s share in state-owned banks below 51%, consolidation to create strong banks is the only survival option. The finance ministry is also looking to merge the newly-launched Bharatiya Mahila Bank with the other PSBs.
Till now, the government has maintained that it would not have any role to play in the merger exercise of public sector banks but in case of unwillingness, despite plans being chalked out by the BBB and the expert committee, then the government would intervene.
Extra Info :
In 2016-17 Budget : 25,000 crore for recapitalization of banks
Gross NPA of PSBs till December 2015 : 3.60 Lakh Crore
So lets discuss some questions related to this article which can be asked in the upcoming exams :
1. Expand the term BBB ?
2. Name the finance minister of India ?
3. Gyan Sangam, an annual retreat of chief of public sector financial institutions, officials from the finance ministry and RBI recently held at which place ?
Courtesy : Hindustan Times