The new Central government will undertake a thorough review of the public sector banks (PSBs) soon after taking office, sources said.
The recent Supreme Court order withdrawing Reserve Bank of India's February 12 circular and letting the PSBs to opt for their own decision on insolvency will also be discussed.
Finance Ministry sources said the review meeting will be held in July now though the groundwork on the bank consolidation and NPA trimming would continue at official level during the interim period as well as it does not require approvals and there will be action on these. The interim Budget, however, had not provided for funds for recap of banks.
Though the ministry has so far not released the figures of NPA recovery on the target of Rs 1.8 lakh crore, but sources said with the delay in Essar Steel's fund distribution due to operational creditors' issues, the target might not have been achieved and fallen short by Rs 50,000 crore. The review of this would also be done after the new government takes charge, they added.
The NPA recovery target was dependent on the Essar Steel deal which did materialise at Rs 42,000 crore but lack of unanimity among the financial and the operational creditors to get the funds distributed led the case to the National Company Law Appellate Tribunal (NCLAT) which delayed the lenders getting their share in 2018-19. The amount can be around Rs 1,000 crore and has to be paid out of Rs 42,000 crore proposed by ArcelorMittal.
This comes after the NCLAT's order where it asked the lenders to reconsider the distribution of dues, as Standard Chartered bank and operational creditors opposed ArcelorMittal's resolution plan on the ground that they are not getting a justified amount.
On the merger front, the government is closely watching how the Bank of Baroda-Vijaya Bank-Dena Bank merged entity is working out. Sources said some other combinations are already in process but since to proceed on concrete proposals, it needs the approval of the government panel on bank mergers, no movement can take place.
Market buzz says the Punjab National Bank, the Syndicate Bank, and the Indian Overseas Bank are in various permutations and combinations of a merger likelihood at an informal level of discussion among themselves and with other banks.
The recapitalisation of PSBs has been exhausted in 2018-19 with the last tranche on February 20 having infused Rs 48,239 crore in 12 public sector banks but skipping the Bank of Baroda. In March last week, the pending Rs 5,000 crore was given for growth capital in the amalgamated entity of the Bank of Baroda.
With this, the government has spent a total amount of Rs 1.06 lakh crore set aside for capital infusion in public sector banks for the current financial year.
On the performance of banks, six banks have come out of the RBI weak banks framework of PCA -- prompt corrective action -- after capital infusion while many like the SBI, and the PNB have reported robust profits. Their Q4 results are awaited.
The Bank of India (BoI), the Bank of Maharashtra, the Oriental Bank of Commerce, the Corporation Bank and the Allahabad Bank are out of the PCA framework.
--IANS
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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)