PSB Merger & Privatization: Silence Until LS Polls End

It will not be appropriate to comment on the merger or privatisation of Public Sector Banks PSBs since the Lok Sabha Elections are underway, Financial Services Secretary Vivek Joshi said on Friday. Elections are going on, it is not appropriate to comment on such issues, Joshi said.

It will not be appropriate to comment on the merger or privatisation of Public Sector Banks (PSBs) since the Lok Sabha Elections are underway, Financial Services Secretary Vivek Joshi said on Friday. The clarification was sought after media reports suggesting the government could plan merger of PSBs instead of privatisation. ''Elections are going on, it is not appropriate to comment on such issues,'' Joshi said. The government in the past had done consolidation of PSBs in two tranches.

The mega consolidation, which took effect from April 1, 2020, saw 10 PSBs consolidate into four -- Oriental Bank of Commerce and United Bank of India merged with Punjab National Bank; Syndicate Bank merged with Canara Bank; Andhra Bank and Corporation Bank merged with Union Bank of India; and Allahabad Bank with Indian Bank.

Prior to this mega consolidation, Vijaya Bank and Dena Bank merged with Bank of Baroda with effect from April 1, 2019. Asked on the RBI's recent circular on higher provisioning for under-construction infrastructure projects, Joshi said these are draft guidelines and stakeholder consultation is on.

Industry bodies like Indian Banks' Association and other bodies will be sending their comments and the Department of Financial Services (DFS) will submit its opinion if required during the course of consultation, he said.

Earlier this month, the Reserve Bank of India (RBI) proposed that banks set aside a provision of 5 per cent of the loan amount for infrastructure projects at the construction phase.

This will be reduced to 2.5 per cent once the project gets operational and will be cut further to 1 per cent when the project receives adequate cash flow to repay its obligations.

At present, lenders are required to have a provision of 0.4 per cent on project loans that are not overdue or stressed.

Earlier speaking at the CII Annual Business Meeting here, Joshi said India is expected to become the third largest economy in the world in the next three years.

India, presently, is the fifth largest economy in the world with an estimated GDP of USD 3.7 trillion and is expected to become USD 5 trillion in the next three years, he said.

On the account aggregators scheme, he said, the DFS is in talks with the RBI to make the scheme far more successful and more secure.

Account aggregators are entities that enable financial data sharing from Financial Information Providers to Financial Information Users, based on the consent from customers.

Sharing data on disbursement under the Emergency Credit Line Guarantee Scheme (ECLGS), he said Rs 2.68 lakh crore loan has been disbursed to about 1.19 crore beneficiaries.

The scheme is the biggest fiscal component of the Rs 20-lakh crore Aatmanirbhar Bharat Abhiyan package announced by Finance Minister Nirmala Sitharaman in May 2020, to mitigate the distress caused by the Covid-19-induced lockdown by providing credit to different sectors, especially MSMEs.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)