New Delhi, Aug 30, 2019: A week after announcing a slew of measures to revive growth in the Indian economy, Finance Minister Nirmala Sitharaman Friday highlighted the government’s move on making the path clear for $5 trillion economy. Announcing a series of banking mergers, Sitharaman stressed on the need for consolidation by amalgamating several banks to put in a robust network to revive the sector.
FM, Sitharaman announced the consolidation of Canara bank with Syndicate Bank to form the third-largest PSB with a business of Rs 15.20 lakh crore. The merger of Union Bank with Andhra Bank and Corporation Bank will form the fourth-largest PSB with 9,609 branches. The government also announced the merger of Indian Bank with Allahabad bank with a business of Rs 8.08 lakh crore, 1.9 times of Indian Bank and covering south, north and eastern sectors.
The government announced the merger of Punjab National Bank (PSB), Oriental Bank of Commerce (OBC) and United Bank of India with a business of Rs 17.95 lakh crore and a network of 11,437 branches across India forming the second largest Public Sector Bank (PNB).
Meanwhile, the Bank of India and Central Bank of India will continue as central banks with a national presence. To strengthen the regional presence, Sitharaman announced that Indian Overseas Bank will continue its operations in the south, Uco Bank will keep operation in east and the Punjab and Sindh bank will continue with 1.71 lakh crore business in the north.
The Indian economy which is currently at $2.65 trillion is facing a downward spiral with the government infusing fresh capital in the banking system. "We are giving these bank enough capital reserve to function without worry. Enough instructions have been given at branch level to make sure credit availability, liquidity will not suffer," Sitharaman said.
Announcing a positive growth in the banking system, the finance minister stressed that the gross bad loans of public sector banks have come down to Rs 7.9 lakh crore from Rs 8.65 lakh crore at December-end 2018.
Sitharaman, addressing the press conference, said that partial credit guarantee scheme for NBFCs has been executed since the last announcements and Rs 3,300 cr liquidity support has been given, while Rs 30,000 crore is in pipeline. Announcing measures to strengthen the banking system, the finance minister said, "We need to lay a strong foundation for finance sector by strengthening the banks and giving them a good governance module. In the last several years, we have made sure that several banking reforms are undertaken."