The government is open to further consolidation of banks depending on needs, Minister of State for Finance Anurag Singh Thakur has said. Last year, the government announced mega amalgamation of 10 public sector banks into four to cater to the needs of the aspirational and New India.
This exercise will create six global sized banks, effective April, and will bring down the number of public sector banks to 12 from 27 in 2017.
"We have successfully done the mergers and recapitalisation of the banks. Insolvency and Bankruptcy Code (IBC) has been successful which has brought back more than Rs 4 trillion to the banks. Further consolidation or merger will depend on the need," Thakur told PTI in an interview.
Creation of global sized banks through consolidation will facilitate Modi government's resolve to make India a USD 5 trillion economy by 2024-25, he said. Bigger banks would have wider reach, stronger lending capacity and better products and technology to serve customers of New India.
Last year in August, the government announced merger of United Bank of India and Oriental Bank of Commerce with Punjab National Bank, making the proposed entity the second largest public sector bank (PSB). It was decided to merge Syndicate Bank with Canara Bank, while Allahabad Bank with Indian Bank. Similarly, Andhra Bank and Corporation Bank are to be consolidated with Union Bank of India.
In April 2019, Bank of Baroda in a first three-way merger exercise amalgamated Vijaya Bank and Dena Bank with itself. SBI had merged five of its associate banks - State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad and also Bharatiya Mahila Bank with itself effective April 2017.
Asked about listing of LIC as announced in the Budget, Thakur said it will help bring in greater transparency, public participation and also deepen the equity market.
Finance Minister Nirmala Sitharaman while presenting the Budget 2020-21 on February 1 proposed to sell a part of government stake in LIC through an initial public offer next fiscal.
The government aims to garner Rs 90,000 crore from the listing of LIC and stake dilution in IDBI Bank in the next fiscal out of total disinvestment target of Rs 2.10 trillion. The government owns 100 per cent stake in LIC, and around 46.5 per cent stake in IDBI Bank.
Terming this year's Budget 'Jan Jan Ka Budget', Thakur said every strata of the society has been taken well into consideration and major reforms have been undertaken benefiting youth, women, farmers, investors and the middle class.
The government has provided Rs 2.83 trillion for agriculture, farmer welfare and rural development.
"Doubling farmers' income is an agenda for the next two years. We have already fulfilled the commitment of one and a half times of cost of production of farmers which the government had promised," he said.
With the announcement of 'Kisan Rail' and 'Krishi Udaan' to be launched by Indian Railways and Ministry of Civil Aviation, respectively, for a seamless national cold supply chain for perishables, this too will serve beneficial as it will aid farmers in facilitating smooth and fast transport of perishable goods, he said.
In addition, the government has increased agriculture credit target to Rs 15 trillion for the next fiscal.
Thakur said, "from startups to education, internship to apprenticeship, many announcements have been done...So, I think more young entrepreneurs, more startups we are going to see...We see India moving to top three startup countries in the world in the next couple of years".
With regard to helping the MSME sector, he said, the government has asked the RBI to consider extending debt restructuring window by another year till March 31, 2021. More than five lakh MSMEs have benefitted from restructuring of debt permitted by the Reserve Bank of India last year, he said.