Finance Secretary Rajiv Kumar is scheduled to meet heads of Public Sector banks on 19 September to review the progress made by them. This meeting is expected to help boost growth, including follow up actions after reduction of interest rates by RBI, sources said on Thursday.
The meeting comes against the backdrop of Finance Minister Nirmala Sitharaman announcing various measures to push economic growth. According to sources, the agenda of the review meeting is to follow up action with respect to RBI rate cuts, and collaboration between banks and NBFCs for co-origination of loans to boost lending.
Besides this, it would also assess the introduction of repo-linked loans to attract new borrowers to push consumption and partial credit guarantee scheme for NBFCs, among others. Sources have said that progress made by banks towards consolidation would also be discussed at the meeting.
On August 30, the government announced the consolidation of 10 large Public Sector banks into four. As part of the exercise, Punjab National Bank, Oriental Bank of Commerce, and United Bank of India would combine to form the nation's second-largest lender. Canara Bank and Syndicate Bank would be merged while Union Bank of India would be amalgamated with Andhra Bank and Corporation Bank. Indian Bank would be merged with Allahabad Bank.
The decision, however, did not attract positive responses from many. Members of the All India Bank Employees' Association had staged a protest in Chennai against the Centre's decision to merge 10 public sector banks into four entities. Additionally, employees of all public and private sector banks wore black badges to work as a mark of protest to the government's decision.
This year saw a lot of bank mergers
Earlier this year, Bank of Baroda merged with Vijaya Bank and Dena Bank. Also, State Bank of India had merged five of its associate banks -- State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, and State Bank of Hyderabad -- and also Bhartiya Mahila Bank, effective April 2017.
On a related note, economic growth has hit a six-year low of 5 per cent in the first quarter of the current fiscal.