PSB ThinkShop: Banks seek change in lending structure to improve efficacy

In a two-day meet in Gurgaon, public sector bankers discussed the nitty-gritties of the lending structure and how to make state-run lenders more efficient.  

Named PSB ThinkShop, (earlier editions were called Gyan Sangams), the weekend meet had been organised by the Department of Financial Services (DFS).

The meet ended with bankers making a presentation to Finance Minister Arun Jaitley, a Livemint report says.

Finance Minister Arun Jaitley Sunday said the government has decided to inject more capital in state-owned banks to strengthen the banking system and spur economic growth. 

Last month, the government had unveiled a staggering Rs 2.11 lakh crore two-year road map to bolster NPA-hit public sector banks, which includes recapitalisation bonds, budgetary support and equity dilution.

The bankers who attended the meeting suggested the idea of differentiated lending. According to them, this step will help the banks to focus on regional advantage or understand of a particular sector, a Livemint report suggests. 

However, differentiated lending is not a new concept. Earlier, a committee led by former Reserve Bank governor M. Narasimham also suggested this three-tier structure.

Financial Services Secretary Rajiv Kumar told PTI that the reforms also include bank boards taking a stand and coming up with a clear plan for consolidation. He emphasised that recapitalisation does not come on its own as it is followed and preceded by a whole lot of reforms. 

Banks will also be getting nearly Rs 18,000 crore under the Indradhanush plan.

The other topics discussed in the meet were reforms, including the strengthening of bank boards, resolution of NPAs and HR issues and credit growth. 

The finance minister assured the bankers that “you won’t find us interfering” in commercial transactions, but “when the system is making all these changes and all these monetary contributions in order to strengthen the banking system, we want robust public sector banking system so that your ability to support growth itself increases”.