Finance Minister Nirmala Sitharaman in her second press conference on Friday, talked about on financial crisis and adaptive measures to combat the same.
The press conference was held at an interesting point of time – a day after RBI released its annual report and shortly before the GDP figures for the first quarter of FY20 are announced.
Previously on August 23, FM Sitharaman had announced various measures to aid the sick Indian economy to health. The steps included an upfront release of Rs 70,000 crore to public sector banks, measures to solve the slowdown in the auto sector, improve taxes compliance and help MSMEs and India Inc.
In her second press conference, She first announced measures for the banking sector. She announced major bank mergers. Namely,
- Punjab National Bank, Oriental Bank of Commerce, and United Bank. The merged entity will be the second-largest bank in India with a business of Rs. 17.95 lakh crore.
- Indian Bank is being merged with Allahabad Bank. The business size will make it the seventh-largest bank.
- Union Bank of India, Andhra Bank, Corporation Bank will be merged to become the fifth-largest PSB.
- Canara Banka and Syndicate Bank will be merged, and this will be the third-largest bank,
The merger brought 27 public sector banks down to 12. The FM said this merger would strengthen the bank board committee.
Apart from mergers of banks, she announced measures to reform PSB boards.
Board committees of nationalized banks to appraise the performance of GMs and above, including MD. Boards are given the flexibility to introduce CGM level as per business heads.
Boards are given residual service to ensure GMs and above are given tenure of at least two years. Boards can decide on the pay of non-official directors.
Boards can recruit Chief Risk Officer, at market-linked compensation. Risk Management Committee given mandate to fix accountability for compliance of Risk Appetite Framework. MCB loan sanction thresholds enhanced up to 100%