She said, eight PSU banks have launched repo-linked loans in last one week. In deciding on the combinations for final mergers, the government has picked some of the larger and relatively stronger banks to be the "acquirer banks". Similarly, PNB, OBC, Utd Bank, Union Bank and Corporation Bank are on Finacle banking platform. This will form India's second-largest public sector bank, after the State Bank of India, with Rs 18 lakh crore business and the second-largest branch network.
Sitharaman said that the government has recognized that consumption needs a boost. Its gross NPA ratio stood at 16.5 percent as of June 2019.
"It [the merged entity] will have a business of Rs 17.95 lakh crore (1.5 times of PNB)". As the first step, she announced the merger of public sector banks.
"The changes in FDI policy will result in making India a more attractive FDI destination, leading to benefits of increased investments, employment, and growth", Commerce Minister Piyush Goyal told a media briefing after the meeting of the Union Cabinet. That's slower than the 5.8 per cent expansion in the previous quarter. The share of toxic loans as a percentage of total loans has been rising.
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.
She said the sanction has begun with Rs 3,300 crore and Rs 30,000 crore more were in the pipeline.
The finance minister said that several new processes have been implemented in the banking sector to avoid bank frauds and bad loans.
During FY19, Indian Bank reported a net profit of ₹322 crore while Allahabad Bank incurred a loss of ₹8,334 crore. Also, Indian Overseas Bank, Uco Bank, Bank of Maharashtra and Punjab and Sind Bank, which have strong regional focus, will continue as separate entities.
The Finance Minister also announced three other PSU bank amalgamation plans. This is a part of the government's agenda to shrink the number of public sector banks in India from 27 to 12.
Punjab Nationwide Financial institution, Oriental Financial institution of Commerce and United Financial institution could be merged right into a consolidated financial institution, which is able to grow to be the second largest state-controlled financial institution within the nation. Bank of Baroda, Vijaya Bank and Dena Bank will amalgamate into a single organisation.
The government also allowed the Life Insurance Corporation to acquire 51 per cent in the IDBI Bank.
Indian banking sector undergoes major mergers
This announcement comes a week after Sitharaman announced a slew of measures to give a fillip to the economy. Financial sector and banks are the topics for today's meet, announces Nirmala Sitharaman .
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