HOME > BUSINESS > Public Sector Banks need autonomy, mergers will be of limited use – Assocham

Public Sector Banks need autonomy, mergers will be of limited use – Assocham

sbiAsserting there are no quick fixes for grave problems facing the public sector banks, mainly centered around close to Rs 5 lakh crore non-performing assets, ASSOCHAM President Mr Sunil Kanoria today said a paper brought out by the chamber clearly suggests mergers or consolidation of the PSBs is certainly no answer to the present crisis, which can only be resolved by professionalizing these banks with the government keeping an arm’s length.

Addressing the media, Mr Kanoria said, “Our paper has also noted that as things stand today, the boards of the PSBs are not empowered enough to choose a glide path for their banks. Instead, they need to refer to the Finance Ministry circulars even for mundane things.”

Releasing a study titled ‘Convergence, Not Consolidation Answer for Public Sector Banks,’ along with chamber’s Secretary General, Mr D S Rawat at a press conference held in New Delhi said, “If size of the banks had a relationship with the health of the financial sector, the Chinese banks would have been the healthiest lot. But, the biggest concern before the global financial community today is the health of the Chinese banks”.

Of the top ten global banks on the S & P Global Market Ranking, the first four are from China with Industrial and Commercial Bank of China right at the top. Only two American banks – JP Morgan and Bank of America, figure on the table of top ten and the Wall Street has no liking either for the size and seems quite disillusioned with the so-called ‘Too Big to Fail’ concept whereupon it is on the sovereigns to save their banks even if they go reckless in their business.

“But then, somehow, here in India we have got this penchant for large size to be achieved by merging different entities”, said Mr Kanoria. If at all, there is a case for a merger, it is weak bank merging into strong one; but here we have a situation where there are hardly strong banks in terms of crucial parameters, large book size notwithstanding.

With some high profile borrowers getting into litigation and facing criminal probes, the public discourse puts additional pressure on the government, to find some quick fixes for NPA-ridden banks, which find themselves terribly constrained to improve lending with the credit growth well below 10 per cent.

More than the size of the bank, what matters is the composition and the empowerment of the bank board’s which need to include professionals without operational interference from the government, said ASSOCHAM President.

Unlike the present situation where the Financial Services Division in the Finance Ministry is virtually the master of the PSBs, the level of the government interface with the banks should be well-defined and be done only through the Banks Board Bureau ( BBB) , comprising people of eminence, integrity and domain expertise

There is a case, certainly for synchronization of the businesses among the PSBs. The paper said there could be a few PSBs which are strong in say, automobile portfolio in a particular region, say south India. On the other hand, there may be banks which are strong in agro financing in the same area but are not doing well in automobile finance. The entire portfolio of auto finance can be swapped. Conversely, same thing can be achieved for the agro financing portfolio, of course over and above the mandatory priority sector lending.

Sensing an inflexion point, the paper said the technology driven banking is here, right away and it is only going to increase. In about a year, 17 new banks will begin business. These are not driven by sheer size; but would leverage technology to reach the un-reached; create new banking customers, take away existing customers from those complacent about their business and would redefine the way people at large do their financial transactions.

Follow ULTRA.news
Demonetization took India forward by 3 years – SBI The demonetization of currency notes late last year has doubled the number of card transactions and helped push India's payment digitisation by three years, State Bank of India said in a note."Even after seven months post demonetization, the transaction value is quite large ...
SBI clears SB Life IPO, to sell 80 mln shares State Bank of India said it had decided to conduct an initial public offer for some of its shares in its insurance subsidiary SB Life Insurance. BNP Paribas Cardif S.A. would also sell some of its shares in the offer.It said the offer would involve 8 crore shares.No valua...
RCom says telcos facing cash flow issues due to ‘go slow’ approach by banks Telecom operator Reliance Communications said companies in the sector are facing cash flow issues due to what it called a 'go slow' approach taken by banks in disbursing loans.In an update on its 'standstill agreement' with its lenders, which provides it a window of seven mon...
Farm loan wavers can impact India’s financial profile – Fitch Ratings agency Fitch said the string of farm loan waivers announced by various Indian states could impact the financial profile of the country as a whole.The agency, however, did not directly say that the moves could lead to a downgrade in India's credit rating, which would i...
Axis Bank says 8 NPA accounts fingered by RBI owes it Rs 5,283 cr Axis Bank said eight of the 12 big defaulters highlighted by the Reserve Bank of India in its June 15 circular owed over Rs 5,000 cr to the bank.The RBI had given a list of 12 large accounts which together owed about 25% of the total bad loans of Indian banks. The total bad l...
Axis Bank confirms exiting POS maker Mswipe Axis Bank confirmed it had sold its 8% share in new-generation card-swiping-machine company Mswipe Technologies.In a regulatory filing, the private sector bank said it sold its 8% stake for Rs 80.94 cr, or Rs 4,249 per share.Mswipe is one of the new generation, low-cost ...
SBI opens QIP at floor price of Rs 287.58 State Bank of India said its committee of directors for capital raising has decided to start receiving bids a qualified institutional placement of its shares with a floor price of Rs 287.58 per equity share."The Bank may offer a discount of not more than 5% to the Floor Pric...
RCom formally assures lenders it will pay Rs 25,000 cr in four months Anil Ambani Group's telecom arm Reliance Communications said it has 'formally' communicated to its lenders that it will pay an amount of Rs 25,000 cr to them on or before Sept 30.The latest statement from the telecom operator comes as a way of reassuring investors and lenders...
Fitch cuts IDBI Bank rating as NPAs climb to 21% Fitch Ratings said it downgraded IDBI Bank's Long-Term Default Rating and its 'viability rating' by one notch each to 'BB+' and 'ccc' with a stable outlook."IDBI Bank's Viability Rating reflects the deterioration of its financial profile in the last two years and our expectat...
PAY REVISION: IDBI Bank employees to strike again tomorrow, May 23 IDBI Bank, one of India's largest government-controlled banks, said it received notice of strike from the "United Forum of IDBI Bank Officers and Employees".The strike will be on Tuesday, May 23, and is aimed at demanding "revision of pay and allowances and other issues," the...
Demonetization hits real estate builder prices, but not resale flats – report Demonetization of 500- and 1000-rupee notes hurt the real estate sector in North India, while its impact on the sector in South India was negligible, according to Magicbricks’ PropIndex for Jan-March 2017.The report, brought out by the eponymous real estate classifieds site, ...
SBI says free ATM transactions not withdrawn India's largest bank, State Bank of India, denied reports that it had scrapped the facility of providing free ATM transactions.SBI CIRCULARThe bank was responding to media reports that said that all transactions will be chargeable from now on.Under the Reserve Bank o...
Kapil Mishra to file FIR against Arvind Kejriwal Estranged Aam Aadmi Party leader Kapil Mishra said he will file a police complaint against Arvind Kejriwal today.The rebel AAP leader has accused the party supremo of taking bribes and acting like a dictator within the party."It is with a heavy heart that I am doing this,...
Indian Railways sees 4% jump in passenger reservations in 2016-17 Inside a sleeper bus by APSRTCIndian Railways saw an increase of 3.91% in the total number of reserved bookings in the financial year ended March 2017, according to data from the ministry of railways.A total of 52.35 cr (523 mln) passengers were booked in the reserved ca...
Supreme Court dismisses Center’s reasons for not appointing Lokpal The Supreme Court has dismissed the government of India's stand that it cannot appoint the Lokpal as there was no leader of the opposition.The court's decision came on a bunch of petitions seeking the appointment of a Lokpal is likely to lead to the first ever appointment...
Mayank Gandhi delivers scathing message to Arvind Kejriwal From the video message of Mayank GandhiFormer compatriot and head of Aam Aadmi Party Maharashtra, Mayank Gandhi has assailed Arvind Kejriwal in an acerbic letter that traces the AAP leader's rise and fall over the last five years.Gandhi, who left the organization after fou...
Glaucus questions stock price of Hong Kong-listed Fullshare Holdings Ltd Glaucus Research Group, a California-based short seller, said it was selling Hong Kong-listed developer Fullshare Holdings due to peculiar trading patterns seen in the stock's counter."Fullshare is supposedly a commercial and residential property developer, but this business ...
There’s no Lokpal because there’s no opposition leader, says govt Lokpal act was passed after massive demonstrations in 2013The Prime Minister's office today said the government has not appointed a Lokpal at the center yet as there is no leader of the opposition in the Lok Sabha.According to the Lokpal and Lokayuktas Act passed in 2013...
Rs 1.7 lakh cr deposited via demonetization may not be withdrawn – SBI Monthly cash withdrawals for all banks | source:SBI ResearchThe Indian banking system is likely to get a permanent liquidity boost of Rs 1.7 lakh cr due to the demonetization of high-denomination bank notes, State Bank of India chief economic adviser said in a note to bank c...
Nearly a quarter of all food samples tested found fake or adulterated Food Adulteration and Testing in India, FY16Over one-fifth of all food samples tested in India's government labs in the last year were found to be fake or adulterated, according to numbers compiled from various state government food testing facilities by union government's d...
Trademark registration up three fold in India National Institute of Intellectual Property Mgmt, DelhiThe number of trademarks awarded by the India's Controller General of Patents, Designs & Trade Marks has jumped threefold this financial year, according to data obtained from the Patent Office.A total of 2.11 lak...
No exemption to Tamil Nadu on NEET: Health Minister Health Minister Faggan Singh Kulaste at an event in DelhiExemptions to the National Eligibility cum Entrance Test cannot be given to any place or zones inside India as a common entrance test is required under the law, Faggan Singh Kulaste, junior minister in charge of health...
SBI’s new minimum balance rule leaves OBC, UCO and PSB as only ‘free’ banks in Ind... SBI Chairman Arundhati BhattacharyaWith the country's largest bank, State Bank of India, refusing to rollback service charges for customers who do not maintain a minimum balance in their accounts, only Oriental Bank of Commerce, UCO Bank and Punjab & Sind Bank remain as ...
PNB, Corp Bank most aggressive in going after big debtors; SBI, BoB more relaxed Punjab National Bank, the third largest public sector bank in India, and smaller cousin Corporation Bank can teach bigger siblings like State Bank of India and Bank of Baroda a thing or two about going after big loan defaulters, an analysis of Reserve Bank of India data shows. ...
Yes Bank denies billion dollar QIP rumors Yes Bank, one of India's youngest, and fastest-growing banks, said it had no plans to go for a billion-dollar qualified institutional placement of its shares as reported by the media.The bank had tried to do a mega share sale in September last year, but the effort didn't find...