Press Information Bureau
Government of India
Ministry of Finance
16-July-2019 18:16 IST
Roadmap for PSBs growth and consolidation

With regard to growth, it is stated that the Finance Minister, in her speech on the budget for the financial year 2019-20 has stated: “Having addressed legacy issues, Public Sector Banks are now proposed to be further provided 70,000 crore capital to boost credit for a strong impetus to the economy.” Accordingly, provision of Rs. 70,000 crore for capital infusion in banks is part of the budget proposal.

With regard to consolidation, it is stated  that the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980 provide that the Central Government, in consultation with the Reserve Bank of India (RBI), may make a scheme, inter alia, for the amalgamation of any nationalised bank with any other nationalised bank or any other banking institution. Various committees, including Narasimhan Committee (1998) constituted by RBI, Leeladhar Committee (2008) chaired by RBI Deputy Governor, and Nayak Committee (2014) constituted by RBI, have recommended consolidation of Public Sector Banks (PSBs) given underlying benefits/synergies. Taking note of this and potential benefits of consolidation, Government, with a view to facilitate consolidation among PSBs to create strong and competitive banks, serving as catalysts for growth and having an improved risk profile, approved an approval framework for proposals to amalgamate PSBs through an Alternative Mechanism (AM). After consideration by AM and the Boards of Directors of Bank of Baroda, Vijaya Bank and Dena Bank (with the Boards of Bank of Baroda and Vijaya Bank giving in-principle approval and the Board of Dena Bank recommending amalgamation), and after obtaining RBI inputs, Government notified the scheme of amalgamation, amalgamating Vijaya Bank and Dena Bank into Bank of Baroda with effect from 1.4.2019. No proposal is presently before the AM for its consideration.

Government holds discussions with chief executives of PSBs on a continuing basis on a variety of subjects such as performance of the bank, banking reforms, financial inclusion, customer ease, etc.

This was stated by Shri Anurag Singh Thakur, Minister of State for Finance & Corporate Affairs in a written reply to a question in Lok Sabha today.