The Narendra Modi government will continue to follow a policy of amalgamating public sector banks to create a few but giant state-owned lenders which are globally competitive, Finance Minister Arun Jaitley said on Thursday.
The government has taken a number of steps to make banks financially sound and healthy, whether they are legislative steps or important measures like “creating healthy large banks, which can be globally competitive”, said Jaitley at an Indian Banks’ Association (IBA) event. “The government will continue to gradually follow a policy of amalgamation.”
In January, the Cabinet had approved of the merger of Vijaya Bank and Dena Bank into Bank of Baroda (BoB). This will make BoB the third largest PSU bank after State Bank of India (SBI) and Punjab National Bank (PNB).
At the event, Jaitley released the BCG-IBA report — EASE ((Enhanced Access & Service Excellence Index) Reforms for Public Sector Banks — which measures the performance of PSBs on 140 objective metrics across six themes, including customer responsiveness, credit off-take and digitisation.
PNB was ranked first among public sector lenders in the implementation of ‘reforms agenda’, followed by BoB and SBI. Based on the parameters, PNB came in with a score of 78.4 out of 100, followed by BoB (77.8), SBI (74.6), Oriental Bank of Commerce (69), Canara Bank (67.5) and Syndicate Bank (67.1).
The report stated PNB showed a “strong performance” in the parameters like customer responsiveness, responsible banking, credit off-take and financial inclusion. Releasing the report, Jaitley said such rankings brought about competitiveness and encouraged banks to perform better than their peers.
“The bank (PNB), which suffered both in terms of finance and transiently, in terms of reputation because of a fraud practice and in nine months had to set aside Rs 14,000 crore for bad assets, rapidly transformed itself into an evolving institution and after a period of nine months in the last quarter declared a profit. It then emerged as the best-performing bank,” Jaitley said.
PNB, which was involved in the Rs 14,356-crore Nirav Modi fraud, swung back into the black in the October-December quarter after posting losses in the previous three quarters. The bank’s net profit rose 7.12 per cent to Rs 247 crore in the three months to December 2018 on speedier recoveries and a slide in bad loans. The six PSU banks, which continue to be under the RBI’s prompt corrective action (PCA) framework, too, have been ranked in the report. These are Indian Overseas Bank (66.7), UCO Bank (64.1), United Bank of India (60.8), IDBI Bank (60.2), Central Bank of India (55.7) and Dena Bank (53.8).
via Policy to merge state-owned banks will continue, says Arun Jaitley | Business Standard News