Finance Minister Nirmala Sitharaman on Friday announced some big measures to pull out the banking sector and the economy from the slowdown. Today she made some big announcements from banks merger to capital infusion.
So here are some key announcements she made:
Explaining the rationale behind announcing the mergers she said: "At the moment, when we are looking at achieving the target of India becoming a $5 trillion economy, we felt that this is the best option."
She announced merger of 10 public sector banks into four big banks. After this the total number of Public Sector Banks in the country will come down to 12 from 27 banks in 2017
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Punjab National Bank is merged with Oriental Bank of Commerce and United bank of India, becoming the second-largest PSB with business size of Rs 17.94 lakh crore.
she announced the merger of Canara Bank with Syndicate Bank. Following this merger, this merged entity will become a fourth largest PSB with the business of Rs 15.20 Lakh crore, third largest branch network in India with 10,342 branches.
Union Bank, Andhra Bank and Corporation bank becoming fifth largest PSB with the business of Rs 14.59 lakh crore, fourth largest branch network in India with 9,609 branches.
Indian Bank with Allahabad bank, which would become a seventh largest PSB with business of Rs 8.08 lakh crore and will have a nationwide presence with strong, networks in north, south and east.
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To strengthen the regional presence of PSBs, Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab and Sind Bank will continue to operate due to their strong regional presence.
Now 88 per cent of all PSB business will be with these consolidated banks.
She also announced Rs 55,250 crore upfront capital for credit growth & regulatory compliance to support the economy. PNB will get Rs 16,000 crore; Union Bank Rs 11,700 crore; Canara Bank Rs 6,500 crore; Indian Overseas Bank Rs 3,800 crore; Central Bank of India Rs 3,300 crore; Bank of Baroda Rs 7,000 crore; Indian Bank Rs 2,500 crore and Uco Bank Rs 2,100 crore.
PSB boards will be given the flexibility to introduce CGM. The PSBs will have to appoint a Chief Risk Officer, who will be provided market-level compensation.
In order to improve governance, boards will be given flexibility to enhance sitting fees of Non-official directors. Longer terms will be given to directors on management committees to ensure continuity.
Boards will be given a mandate for the training of directors, both for induction and specialisation purposes.
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