Bengaluru, NFAPost: To inject liquidity into markets to shore up Indian economy, Finance Minister Nirmala Sitharaman said ten public sector banks will be infused with a total of Rs 55,250 crore capital, of which Punjab National Bank will get Rs 16,000 crore.
The Union Bank of India and Bank of Baroda will get Rs 11,700 crore and Rs 7,000 crore, while Canara Bank and Indian Bank will get Rs 6,500 crore and Rs 2,500 crore, respectively, Sitharaman told reporters in New Delhi.
The breakup of capitalisation for other banks are – Indian Overseas Bank (Rs 3,800 crore), Central Bank of India (3,300 crore), UCO Bank (Rs 2,100 crore), United Bank of India (Rs 1,600 crore) and Punjab & Sind Bank (Rs 750 crore), she said.
On giving a push to consumption, Sitharaman said the government will announce two more big measures in coming days to give fillip to industry.
The government has already announced various steps to arrest slowdown in automobile market and also taken decision to increase spending in infrastructure to boost the economy, Sitharaman said.
Responding to a query on government’s plans to utilise Rs 1.76 lakh crore received from the RBI, she said nothing has been decided yet.
Announcing the mega merger of public sector banks, Sitharaman said Punjab National Bank, Oriental Bank of Commerce and United Bank will be merged to form the second largest public sector bank with a business of Rs 17.95 lakh crore.
She also said Indian Bank will be merged with Allahabad Bank and will be the seventh largest public sector bank with business of Rs 8.08 lakh crore.
Sitharaman also said Union Bank of India will be merged with Andhra Bank and Corporation Bank and will become fifth largest public sector bank.
She further said Canara Bank will merge with Syndicate Bank to become the fourth largest PSB with business of Rs 15.20 lakh crore.
Sitharaman said of the total 18 PSBs, 14 banks are profitable in Q1FY19 compared to six in Q4FY18.
She also said there are now only 12 PSBs operating to target the $5 trillion economy now compared to 27 PSBs that were operating in 2017.
Asked about the rationale behind merger of banks, Finance Secretary Rajeev Kumar said, “There should not be any disruption to the customers, and hence we are ensuring that the banks which are merging, they operate on the same technological platform.”
Kumar also said there could not be any more PSU bank mergers and added there are no chances of retrenchment with the bank mergers. “Instead their employment benefits are improving due to the merger. We will ensure that there is no harm to any employee at any stage,” he said.
Sitharaman said gross bad loans of public sector banks have come down to Rs 7.9 lakh crore from Rs 8.65 lakh crore at December-end 2018.
Sitharaman said SWIFT messages have been linked to core banking system to prevent Nirav Modi like frauds.
She also said large loans above Rs 250 crore will be monitored by specialised agencies, but there will be no government interference in commercial decisions of banks.
Sitharaman said as many as 3.38 lakh shell companies have been closed and four NBFCs have already found their solutions through the public sector banks.
She also said eight PSU banks have been announced repo-linked loan rates in the last one week.