 "Banks Board Bureau to discuss lending activity push")
Banks Board Bureau (BBB) Chairman Vinod Rai met Minister of State for Finance Jayant Sinha in New Delhi on Wednesday, a week ahead of the board's next meeting scheduled on April 22.
Rai, former Comptroller and Auditor General (CAG) of India, said the first priority of BBB would be to kick-start lending activity without fear of bureaucratic overhang. "First priority is to kick-start lending activity among Public sector banks (PSBs) without fearing bureaucratic overhand," said Rai.
The bureau had met for the first time in Mumbai on April 8 to discuss consolidation among PSBs and board-level appointments, and recapitalising the lenders.
Reserve Bank of India Governor Raghuram Rajan had cut the repo rate by 25 basis points earlier this month to 6.5 per cent after Finance Minister Arun Jaitley stuck to the fiscal consolidation path in the Budget. The monetary policy had wanted the lower rates passed on to public.
On the much-awaited consolidation of public sector banks, Rai said it was difficult to give a timeline. "The work on PSB consolidation will start along with kick-starting of lending activity by banks."
The bureau was launched on April 1. It is a temporary arrangement, to be transitioned into a Bank Investment Company (BIC) that would act as a holding company for all government-owned lenders. BIC will also be responsible for capital infusion in PSBs.
The transformation of IDBI Bank into a privately owned lender is also underway. Finance Minister Jaitley had said in his Budget speech that the government would bring its stake below 50 per cent in IDBI Bank and look into ways to consolidate existing banks.
Jaitley had also said the government was moving towards privatising IDBI Bank. Capital infusion of Rs 25,000 crore in 2015-16 was also not enough for PSBs. The bureau is expected to discuss a way forward.
Losses of many public sector banks - including Bank of Baroda, Bank of India, IDBI Bank, Central Bank - aggregated over Rs 12,000 crore in the third quarter of 2015-16, while others such as State Bank of India (SBI) and Punjab National Bank (PNB) witnessed a sharp erosion in profits.
PNB posted a 93 per cent decline in profit, with non-performing assets (NPAs) rising to 8.5 per cent of all loans. SBI saw a 62 per cent decline in net profit and fresh slippage of Rs 20,700 crore.
Gross NPAs of public sector banks stood at Rs 3.60 lakh crore at December-end, up from Rs 2.67 lakh crore at the end of March 2015.
