This weekend, top public sector bank (PSB) heads will huddle with experts and government officials to discuss and brainstorm banking sector’s troubles and focus on improvement in credit growth and reducing non-performing assets amid capital needs for most banks.
At Gurugram in a conclave titled Vichar Manthan over two-days, seven groups led by a PSB chief executive officers will give presentations. This is the third such gathering after previous conclaves called as Gyan Sangam were held in 2015 and 2016.
A senior large public sector bank chief told Moneycontrol, “We are meeting to discuss and deliberate on ways to improve the banking sector’s performance, address governance and human resource issues, how to grow credit in the system and also take updates on the ongoing insolvency and bankruptcy proceedings. Capital needs are now being supported by the government as well.”
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The government has already laid out Rs 2.11-lakh crore capital infusion plan through Rs 1.35 lakh crore worth of recapitalisation bonds and Rs 76,000 crore through budgetary allocations and market fund raising.
Union Finance Minister Arun Jaitley is expected to address the two-day conclave at the State Bank of India (SBI) Academy in Gurugram. Early sessions on Saturday at the conclave will dwell on lessons from nine years of loan growth covering days of heady expansion, the effects of the slowdown, and stress recognition, a banker confirmed.
According to a Business Standard report, the presentations will also touch upon themes of digital payments, financial inclusion, responsible and responsive banking. A senior bank executive said the government had accorded priority to increasing lending to medium, small and micro enterprises as they had a higher potential for employment creation. This will be one theme for a presentation with experience sharing on need assessment, monitoring, prompt support for units facing strain, and reducing risks of slippage.
There will also be a discussion around human resources, given the large-scale retirements at the senior level, and practices. Plus, a rapid shift in the skills requirement at the entry level due to digital banking and expansion of networks are expected to come up for discussion to flesh out immediate and long-term strategies, the report said.
In 2015, the government organised a similar conclave, Gyan Sangam, at the National Institute of Bank Management in Pune for banks and financial institutions. This was also attended by Prime Minister Narendra Modi. Its second edition was held in March 2016 at the SBI Academy, after which the government said it had embarked on the third phase of reforms in PSBs that would look into all aspects, including consolidation.
Last week, the government announced the structure of an alternative mechanism to examine proposals for amalgamation. The mechanism, to be headed by the finance minister, may direct PSBs to examine consolidation proposals.
There are now 21 government-owned banks including the now merged SBI. The banking scenario has changed since bank nationalisation in the 1970s and 1980s with an increased presence of private banks, non-banking finance companies, regional rural banks, payments banks, and small finance banks.
The mechanism is expected to facilitate the creation of strong and competitive banks in the public sector. These entities will be better able to meet the credit needs of a growing economy and absorb shocks with an improved capacity to raise resources without depending unduly on the exchequer.