Government Committed to Support All Public Sector Banks- Piyush Goyal

Piyush Goyal

Interim finance minister Piyush Goyal said on Friday that the government was committed to support all state-run banks and strengthen their operations, after several lenders reported a jump in net losses last month.

“The government stands committed to support all 21 Public sector banks,” Piyush Goyal told reporters after a meeting with bank chiefs.

He said a panel headed by Punjab National Bank CEO Sunil Mehta would examine whether banks needed to set up an asset reconstruction company for faster resolution of stressed lenders.

Indian banks, already burdened by a near-record 9.5 trillion rupees ($141 billion) of soured loans as of last year, reported a further rise in bad loans in the March quarter after the central bank withdrew half a dozen loan-restructuring schemes and tightened some rules.

The 21 banks majority-owned by the Indian government, which account for two-thirds of banking assets in the country, hold close to 90 percent of soured loans.

Goyal said the government and the Reserve Bank of India would make all efforts to bring state banks into a “good shape” so that they could once again become “an engine of economic growth”.

“The government of India believes that the autonomy of the banks be recognised,” Goyal said, adding the government has not “micromanaged banks”.

On potential mergers, he said the banks would have to take a final call on consolidation based on their experiences and needs.

Addressing allegations of mismanagement at the private lender ICICI Bank Ltd, Goyal said there was no cause for concern for stakeholders. “ICICI Bank is a good bank. It has very robust processes and there is no cause for concern for any of the stakeholders of ICICI Bank,” he said.

ICICI, India’s third-biggest lender by assets, is battling allegations that its Chief Executive Chanda Kochhar had broken the bank’s code of conduct.

The bank has set up an inquiry into allegations raised by an anonymous whistleblower that Kochhar favoured Videocon Group in its lending practices.

Videocon’s founders had an investment in a renewable energy company founded by Kochhar’s husband. The bank rejected the accusations of nepotism in March and said the board had “full confidence and reposes full faith” in Kochhar.

Goyal said the bank’s internal and external inquiry committees would look into the allegations.

1 Comment

  1. No other panacea to cure weakness in State run Banks but to Recover NPA & Bad Debts.Follow steps:- 1- No loan mafi to any sector for alurement & vote capturing.Stop completely habits .
    2 Recover NPA whosoever corporate or any sector
    3 put behind bar one owner with family from each NPA CREATED
    4 No political accommodation by politicians &affluent beurocacies for pressure on bankers for increase In commitments to any single or corporate entity.
    5 In prove quality of staff &Personnel at Management level.
    6 .Handsome Remuneration at all levels of staff So that they cream of cream Intectuals. Attracted to banks Job.
    7 Attractive retirement benefits including pension &timely upgradation of pension with each WAGE revision. So that They are not attracted to Iillgothen money for Secured honorable status in society.

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