Bank revamp: Govt ropes in private players for ideas

The Bankers’ Retreat is taking place at a time when gross NPAs are expected to jump 31.48 per cent in the fiscal ending March 2016 to Rs 4,26,400 crore from Rs 3,24,300 crore.

Written by George Mathew | Mumbai | Updated: March 7, 2016 6:53 pm

The government has roped in top executives from the private sector for the brainstorming sessions at Gyan Sangam 2.0, the two-day retreat of public sector banks that kicked off in Gurgaon on Friday, primarily aimed at consolidation and bad loan management in the sector.

The conclave, organised by the Finance Ministry, has been divided into five working groups for brainstorming on four key issues. The government has already short-listed the reform agenda. The five selected issues are: restructuring/ mergers & acquisitions, NPA management/ recovery, technology and digital, credit growth and risk management. Senior executives from HDFC Bank, ICICI Bank, UTI, Edelweiss, L&T Finance and Crisil will be part of the discussions.

“The five working groups are likely to continue their work even after the conclusion of the retreat. Some ideas about consolidation of PSU banks are expected to take shape after deliberations,” said a top banking source who did not want to be identified. Animesh Chauhan, MD&CEO, Oriental Bank of Commerce, will head the working group on restructuring and M&A. Apart from MDs and EDs of nine PSU banks, it will have external experts like Bahram N Vakil, senior partner, AZB & Partners, Sanjay Nayar, CEO, KKR, and Leo Puri, MD, UTI Mutual Fund.

The group on NPA management is headed by Rajeev Rishi, CMD, Central Bank of India, Rashesh Shah, Edelweiss Group Chairman, and Y M Deosthalee, Chairman, L&T Finance Holding Co will be external experts. Arundhati Bhattacharya will head the technology working group which will have Rupa Kudva, CEO, Omidyar, Manish Tiwari, CISO, Microsoft, Kiran Ramaswamy of Gartner India, V Vaidyanathan, CMD, Capital First and Manish Khera, CEO, Airtel Money will be external experts.

The working group on credit growth will be headed by Rakesh Sharma, MD&CEO, Canara Bank, with NS Kannan, ED, ICICI Bank, Deepak Kapoor, chairman and territory senior partner, PWC, and Satish Pillai, MD & CEO, CIBIL as external members. The group on risk management headed by Arun Tiwari, CMD, UBI, will have Rajiv Sabharwal of ICICI Bank, Ashu Suyash, MD & CEO, CRISIL, Paresh Sukhantkar, DMD, HDFC Bank and Mohan Bhatia, Wipro, Bengaluru as external members.

While McKinsey will be the facilitator of deliberations, participation of private sector executives is expected to give a new push to the government’s efforts to put PSU banks back on track. “Consolidation should happen in the banking sector. It can be done on the following lines. SBI, BoI and BoB should be merged to be among the largest banks in the world. The second step is merger of Canara Bank, Indian Bank, BoM, IOB and UBI to form the second largest bank. PNB, Vijaya Bank, Andhra Bank and IDBI can be merged to form the third largest. Allahabad Bank, Central Bank, Corporation Bank and P&S Bank should be the fourth largest. OBC, Syndicate Bank, UCO Bank and Dena Bank can become the fifth,” said Ramnath Pradeep, former chairman of Corporation Bank.

The Bankers’ Retreat is taking place at a time when gross NPAs are expected to jump 31.48 per cent in the fiscal ending March 2016 to Rs 426,400 crore from Rs 324,300 crore. On top of this, banks are expected to show restructured loans worth Rs 615,000 crore for the year ending March 2016. This include standard restructuring loan of

Rs 502,000 crore and NPA restructuring of Rs 113,100 crore. The performance of PSU banks had gone for toss after the first Gyan Sangam in Pune on January 2, 2015 and most of them made huge losses in third quarter.
The government has already indicated its dilution plan in IDBI Bank where it currently holds over 80 per cent stake. It’s planning to do an Axis Bank like transformation in the case of IDBI Bank.

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    aakash
    Mar 6, 2016 at 4:21 am
    Private banks are only doing cl banking and cheating their customers with wrong investments and they even dont bother in telling lie..... and govt ministers r only looking their short term profits also by diluting share govt want to give the ownership to those who r willfulll defaulter.....and our minister of state had served the corporates for many year...aur ab apne employers ko bank gift karna chata hai....next election me usko uski aukaat yaad kara denge.....aur koi bhi sarkaribank ko private nahi hone denge.....defaulters pe strict action lene k liye law banane ki jagah unhe bachane ki saajis ho rahi hai.....mckinsey is agent of corporates aur sarkaar usi ko help kar rahi hai.....
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      ANURAG chodhary
      Mar 5, 2016 at 2:27 pm
      Government is making us fool by organizing gyan sangam and blaa blaa blaa They spending so many on organizing such types of meeting and.... what the result ??? Zero Why don't they put large corporate behind bar They have steal money from poor and average cl family Shame shame shame
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      1. H
        Hemal
        Mar 6, 2016 at 2:41 pm
        Are privet bank sucess in difficult time in USA ? Answer NO. NPA in PSU banks due to bankers? Answer NO Are common MAN asking any high tech life? Answer NO. Fraudsters so called political faces b/h that looted public money on a/c of development of public life. Foreigners again plan to capture INDIAN economy's on a/c of BASEL III . History repeats again with our county.Please wake up and save country say no to World Bank , IMF or put our countrys' conditions. One side deal is a surrender not a business . If all PSU bank turn in to private with other country's money then they will follow RBI rules and conditions ? Answer NO. Do not force public to start revolutions of freedom from so called IMF / World Bank . This type of conditions are a silent threat on INDIAN economy. IDBI done nos of things for country's development and now some groups want control on it because they know in war killing elephant is a path of victory. Please do not start privatisation of any PSU banks. Because it's meant for freedom of INDIAN economy.
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        1. K
          Kawish
          Mar 5, 2016 at 12:02 pm
          IDBI Bank is youngest and fast growing bank. It has best income ratio per employee. It starts expanding its branches in last two years. Also some corporate loans turn to nom performing ets. These results in bad effects on books. IDBI will work in very fast growing manner. We strongly opposes dilution of Govt stake in IDBI in name of reform and NPA.
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          1. முருகன்
            Mar 7, 2016 at 11:59 am
            Even after merger they will continue to be PSUs. Merger is good since duplication (branches of many PSU banks at one city/place) can be avoided resulting in huge savings. 4 or 5 big banks are better than 20 small and medium size banks. Better control, better utilisation of staff, computers, stationery, software etc. Merger is a necessity and good for the banking industry. Multiple banking, consortium banking etc will go resulting in better credit monitoring. New designations will have to be created to maintain HR relations.
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