Robust public sector banking will support growth: Arun Jaitley
ET Bureau|
Nov 13, 2017, 12.17 AM IST
NEW DELHI: A robust public sector banking system will have an increased ability to support economic growth, finance minister Arun Jaitley said on Sunday as the government moves to recapitalise state-run lenders burdened with bad loans.
“When the system is making all these changes and all these monetary contributions in order to strengthen the banking system, we want robust public sector banking system so that your ability to support growth itself increases,” the finance minister said at ‘PSB Manthan’ — a twoday conclave of public sector banks in Gurugram.
Jaitley said the country was paying to keep the banking system in good health. He demanded more from public sector banks while saying there would be no interference from the government’s side in banks’ commercial transactions. In October, the government announced a Rs 2.11-lakh-crore capital infusion plan for PSBs of which Rs 1.35 lakh crore is to be raised through bonds.
“Banking is, in one sense, the very core of the Indian economy,” Jaitley said. He added that the government was spending a lot of public money and foreign investment was also coming in. “We need the third engine to also fire and a robust private sector and MSME [medium and small enterprises] sector so that optimum growth rate, which we have the potential for, can be reached,” he said.
“One of the focus areas banks have taken up is to support MSMEs because the sector creating jobs and giving boost to the economy has no access to international finance or bond market,” Jaitley said. Referring to the initiation of insolvency proceedings against a number of defaulting companies, the finance minister noted that the early success of the cases will determine the creditordebtor relationship in future.
He also said the goods & services tax was a great enabler for banks too since it would give them the idea of credit requirement of companies because more transactions would become transparent.
‘CAPITAL SUPPORT CONDITIONAL’
Speaking at the same conclave, financial services secretary Rajiv Kumar said the aim of the event was to essentially emphasise to the PSBs that the government’s capital support was conditional to the kind of reforms the lenders initiate to become “responsible and responsive”. Kumar said the reforms agenda included strengthening of bank boards, resolution of nonperforming assets and resolving human resource issues.
“Everything is linked to the reforms which each board will consider within a short period of time as to what kind of business [they want to do] and how they want to go ahead. It’s not easy money which is going to come --that is the main point. It has to be followed up with a whole lot of reforms,” he said. Kumar said the reforms included bank boards taking a position and giving a clear-cut plan on consolidation.
The two-day banking conclave saw top bankers being divided into six groups to talk about ‘responsive and responsible banking’, ‘credit takeoff’, ‘NPA resolution’ and ‘consolidation’.
“When the system is making all these changes and all these monetary contributions in order to strengthen the banking system, we want robust public sector banking system so that your ability to support growth itself increases,” the finance minister said at ‘PSB Manthan’ — a twoday conclave of public sector banks in Gurugram.
Jaitley said the country was paying to keep the banking system in good health. He demanded more from public sector banks while saying there would be no interference from the government’s side in banks’ commercial transactions. In October, the government announced a Rs 2.11-lakh-crore capital infusion plan for PSBs of which Rs 1.35 lakh crore is to be raised through bonds.
“Banking is, in one sense, the very core of the Indian economy,” Jaitley said. He added that the government was spending a lot of public money and foreign investment was also coming in. “We need the third engine to also fire and a robust private sector and MSME [medium and small enterprises] sector so that optimum growth rate, which we have the potential for, can be reached,” he said.
“One of the focus areas banks have taken up is to support MSMEs because the sector creating jobs and giving boost to the economy has no access to international finance or bond market,” Jaitley said. Referring to the initiation of insolvency proceedings against a number of defaulting companies, the finance minister noted that the early success of the cases will determine the creditordebtor relationship in future.
He also said the goods & services tax was a great enabler for banks too since it would give them the idea of credit requirement of companies because more transactions would become transparent.
‘CAPITAL SUPPORT CONDITIONAL’
Speaking at the same conclave, financial services secretary Rajiv Kumar said the aim of the event was to essentially emphasise to the PSBs that the government’s capital support was conditional to the kind of reforms the lenders initiate to become “responsible and responsive”. Kumar said the reforms agenda included strengthening of bank boards, resolution of nonperforming assets and resolving human resource issues.
“Everything is linked to the reforms which each board will consider within a short period of time as to what kind of business [they want to do] and how they want to go ahead. It’s not easy money which is going to come --that is the main point. It has to be followed up with a whole lot of reforms,” he said. Kumar said the reforms included bank boards taking a position and giving a clear-cut plan on consolidation.
The two-day banking conclave saw top bankers being divided into six groups to talk about ‘responsive and responsible banking’, ‘credit takeoff’, ‘NPA resolution’ and ‘consolidation’.
