Union Finance Minister Arun Jaitley will chair a three-member body to oversee proposals for consolidation of state-owned banks, as the government pushes amalgamation of lenders to reduce credit risk and make them more competitive.
An “alternative mechanism” for consolidation of public sector banks has been constituted under the chairmanship of Arun Jaitley, said a Press Information Bureau statement. Railway Minister Piyush Goyal and Defence Minister Nirmala Sitharaman will be part of the panel.
The move comes over a month after the Union Cabinet had given its in-principle approval to consolidate India's 21 public sector banks amid concerns over worsening asset quality. A day after the announcement, Finance Minister Arun Jaitley had suggested the constitution of an ‘alternative mechanism' comprising a panel of ministers, appointed by the Prime Minister, to fast-track merger approvals.
The panel will oversee consolidation proposals from boards of PSBs, Jaitley told reporters. “You have large number of banks in the public sector. The objective is to create strong banks. Our experience of consolidation has been positive so far,” he said, adding that an alternative mechanism “enables quick facilitation".
The scope of the alternative mechanism will include:
- Directing banks to examine their merger proposals.
- Receiving inputs from Reserve Bank of India before granting in-principle approval.
- Devising its own procedure for appraisals of banks' consolidation, abiding by the objectives of the Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980
However, the final approval will be given by the central government, following which the proposal will be presented in the Lok Sabha and Rajya Sabha. The alternative mechanism will be housed under the Department of Financial Services,
The panel will submit a report to the Cabinet on the proposals cleared by them every three months.
(With inputs from PTI)
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
