FM Sitharaman unveils major overhaul of ailing state-run banks

In place of fragmented lending capacity with 27 PSBs in 2017 now there will be only 12 state-run banks post consolidation Sitharaman said

She also said in the press conference that the merged entities will have an enhanced risk appetite, thrust on next-gen technology for banking, wider offerings with enhanced customisation, and better ability to raise resources from the market. Sitharaman said taht the country will now have just 12 government-owned banks as opposed to 27 in the past.

Similarly, Indian Bank and Allahabad Bank will be merged to form a single bank where the amalgamated entity will have a business of Rs 8,07,859 crore.

In January this year, the Union Cabinet had approved merger Dena Bank and Vijaya Bank with Bank of Baroda.

Ms. Sitharaman also said that instructions had been given to the banks to ensure the time-bound return of loan documents following the closure of loans. The combined advances base of the merged bank will be Rs 6.61 lakh crore and the deposit base will stand at approximately Rs 8.6 lakh crore.

Nationalisation also meant to give a "professional bent to bank management" and to "encourage a new class of entrepreneurs", then Prime Minister Indira Gandhi had said.

"The merged bank will business of Rs 17.95 lakh crore".

While Punjab National Bank, Oriental Bank of Commerce and United Bank will merge, Sitharaman announced merger plans of three other PSU banks.

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India Friday unleashed the long-awaited big bank consolidation programme, merging 10 state-run lenders across the country into four. The last statement is a hint at the bad loans crisis that the banking sector faces.

Finance secretary Rajeev Kumar said that there has been no retrenchment so far and that there is no of the same.

Meanwhile, Sitharaman also said that last week's announcement of front loading Rs 70,000 crore capital infusion of the banks has already been set in motion.

India nationalised banks in 1969 to remove the concentration of control from the hands of a few.

Also, bank boards will be given flexibility to fix sitting fee of independent directors, she said, adding that non-official directors will perform role analogous to independent directors.

The UCO Bank will get Rs 2,100 crore, the United Bank of India Rs 1,600 crore and the Punjab & Sind Bank Rs 750 crore.

Responding to a query on Congress' reported comment on running an "unfit economy", she said the opposition party should not comment on the economy being "fit or unfit". In 2017, the State Bank of India absorbed five of its associates and the Bharatiya Mahila Bank. In 2018, the government made a decision to merge the Bank of Baroda with the Vijaya Bank and the Dena Bank.

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