Bank mergers only good option, need to strengthen weak PSBs first: Arun Jaitley

Banking sector consolidation may take a little longer to fructify as weak public sector banks will need to grow stronger before any merger can take place, according to Finance Minister Arun Jaitley.

In an exclusive interview to News18 Network, Jaitley also allayed fears of bank closures saying that shutting down is not an option for banks.

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Committed to bank consolidation and privatisation of IDBI bank: Jaitley

Finance minister Arun Jaitley on Friday said the government was committed towards consolidation of banks and privatisation of IDBI Bank. “I stand by both these announcements and they will happen at appropriate time once the financial health of banks strengthen,” he said.

Jaitley argued that merging two weak banks or merging a weak bank with a strong one is not an option.

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Banks' performance to be under scrutiny: Arun Jaitley

Finance Minister Arun Jaitley on Saturday said that Indian taxpayers were making a sacrifice to keep the banking system in good health and hence the performance of banks would be under the lens over the next few years. 

He said the government's Rs 2.12 lakh crore recapitalisation plan was to keep banks in good health, which was "extremely" important for the economy. 

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Government should bring down its stake in Public Sector Banks:CII

The government should bring down its stake in public sector banks (PSBs) to 33 per cent in the next three years as it plans to recapitalise banks to strengthen NPA-hit lenders, the Confederation of Indian Industry has said.

”…Over the next 2-3 years, the Government could consider bringing down its stake in most PSBs to 33 per cent. It could retain a larger share in State Bank of India in order to meet priority needs. Offloading of stake may be in the form of preference shares instead of equity shares to maintain the majority voting rights with the Government with nil transference to investors.

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New FRDI Bill won't take away your money in the bank says Finance Minister

The Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill) goes beyond the current provisions to provide greater protection to depositors, the finance ministry has said defending the Bill that has raised apprehensions in some quarters. 

The statement follows concerns regarding "bail-in" provisions of the Bill. "The provisions contained in the FRDI Bill, as introduced in the Parliament, do not modify present protections to the depositors adversely at all. They provide rather additional protections to the depositors in a more transparent manner," the statement said clarifying the provisions. Introduced in the Lok Sabha on August 10, the Bill is presently under the consideration of a joint committee of Parliament, which is consulting all the stakeholders on the provisions of the proposed legislation. The claim of depositors will be further strengthened as the FRDI Bill raises the order of priority for uninsured deposits above than unsecured creditors, central and state governments, a government official told ET. 

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Next big move by Modi Government – Centre may withdraw the Bank Cheque Book facility

A senior functionary of industry body CAIT today said the Centre may withdraw the bank cheque book facility in the “near future” to encourage digital transactions.

A senior functionary of industry body CAIT today said the Centre may withdraw the bank cheque book facility in the “near future” to encourage digital transactions.

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Govt may advance planned PSU bank capital infusion of Rs 10,000 crore

The government may infuse an additional Rs 10,000 crore in public sector banks in FY18 itself, thereby advancing its FY19 capital infusion plan, CNBC TV18 reported citing sources.

In addition to direct infusion of capital, the government will also be issuing recapitalisation bonds to PSU banks, the first tranche of which will consist of bonds worth around Rs 70,000 crore.

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14 banks selected for facilitating government payments

 As part of facilitating payments to the government through banks (instead of depending on treasuries), it has shortlisted 14 banks. With effect from February 1, all payments received at the field offices of various government departments - including village offices, taluka offices, and sub-registrar offices - can be remitted to any branch of the banks that have been short-listed. Till date, government offices had to remit the money at the nearest branch of treasury or treasury branches of three banks.

The order issued by finance department on Tuesday said that during the initial stage, the facility will be extended to the public who can remit money at the banks directly, instead of remitting the same at government offices.

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Government sanctions Rs 700 crore to recapitalize regional rural banks

The government today sanctioned an additional Rs 700 crore for the recapitalization of weak regional rural banks (RRBs) and extended the validity period for the fund infusion to next fiscal.

"The validity period for recapitalization of RRBs had ended. It has been extended to 2016-17. Rs 700 crore additional amount has been sanctioned," Finance Minister Arun Jaitley said after the Cabinet meeting here.

The Cabinet, chaired by Prime Minister Narendra Modi, approved for extension for the next three years, that is up to 2016-17 of the scheme of recapitalization of weak RRBs, he said.

These banks are unable to maintain their minimum Capital to Risk weighted Assets Ratio (CRAR) of 9%, he said, adding, this decision will help them improve this ratio.

A strong capital structure and minimum required level of CRAR will ensure financial stability of RRBs which will enable them to play a greater role in financial inclusion and meeting the credit requirements of rural areas, he said.

Presently, there is a Budget provision of Rs 15 crore for recapitalization of RRBs.

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