Nirmala Sitharaman announced major reforms for Public Sector Banks on Friday, in continuation of measures announced with a view to bringing the economy back on track and on its way to meeting PM Modi's $5 trillion target. In her media briefing, she confirmed the merger 10 Public sector banks into 4 big PSBs. The Finance Minister also said that having strong governance is very important and indicated governance reforms for Public Sector Banks. She also focused on reforms in the big loans process.
Finance Secretary Rajeev Kumar tweeted about the various governance reforms for PSU banks to achieve the $5 trillion economies.
Reformed & revitalised #PSBsFor5TrillionEconomy. Government effects Governance Reforms. Boards empowered, Board committees strengthened, non-official directors enabled to play effective role, leadership pipeline initiated. @PMOIndia@FinMinIndia@PIB_Indiapic.twitter.com/UumR7kFyXr— Rajeev kumar (@rajeevkumr) August 30, 2019
Key takeaways from the Finance Minister's reform measures announced on Friday.
1. 4 PSU bank mergers announced
Punjab National Bank, Oriental Bank Of Commerce and United Bank of India
Canara Bank and Syndicate Bank
Indian Bank and Allahabad bank
Union Bank, Andhra Bank and Corporation Bank
2.No Retrenchment in Banks
Department of Financial Services Secretary Rajeev Kumar said there are no chances of retrenchment in banks as part of the merger process. He said the Government was instead focusing on improving the employee benefits due to the mergers.
3. Capital Infusion for PSBs
Nirmala Sitharaman announced the approximate capital that will be infused in state-run banks:
- Punjab National Bank- Rs. 16,000 crore
- Union Bank of India- Rs 11,700 crore
- Bank of Baroda- Rs 7000 crore
- Canara Bank- Rs 6500 crore
- Indian Bank- Rs 2,500 crore
- Indian Overseas Bank- Rs 3,800 crores
- Central Bank of India- Rs 3,300 crore
- UCO Bank- Rs 2,100 crore
- United Bank- Rs 1,600 crore
- Punjab and Sind Bank- Rs 750 crore
Implementation of bank mergers has already begun says Finance Minister
The Finance Minister said that the implementation of bank reforms had already begun, as some measures that were announced a week earlier are already being implemented. She announced some reforms such as removal of a tax surcharge on foreign office portfolios and recapitalization plans for banks worth Rs 70,000 crores. She also said that the focus was on reviving the automobile industry last week.