August 19, 2015 1:20:23 am
With the government announcing plans to infuse Rs 25,000 crore capital in public sector banks this fiscal, financial services secretary Hasmukh Adhia said this will allow them to tap the markets when their valuations are improved. In an interview, Adhia also said the finance ministry is working to strengthen fraud detection processes at PSBs. Excerpts:
Are PSBs looking to cut down government stake to raise capital? Are any merger proposals such as those of SBI and its subsidiaries pending with the department?
We are set to infuse Rs 70,000 crore in public sector banks over the next four years, of which Rs 25,000 crore is this fiscal. So PSBs don’t need to go to the market in distress. We have given them enough buffer and they can go to the market when their valuations improve. It may not happen now as they will wait for good opportunity for their market cap to go up. On mergers also, there is no proposal. I am not sure there is any proposal on merger of SBI and its subsidiaries for merger.
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The Reserve Bank of India has been given sufficient representation on the Bank Board Bureau (BBB) …
The RBI never wanted to be part of any recruitment process, they were very unwilling and they had been telling us not to involve them as they have a clash of interest as regulators. So the BBB is independent and it is only a part-time board.
By when will the holding company for PSBs be set up?
It is away a couple of years down the line. It has been in discussion for quite some time but it will require legislative changes. Legislative changes can only be done when the government is sure that the parties will support it.
How is the government planning to improve investigative and fraud detection processes at PSBs?
Fraud is a major area of concern, especially as people get away with it. We want to tighten it to ensure timely complaints are filed with the Central Bureau of Investigation (CBI) and the accused are quickly brought to books. We have streamlined the entire process. Any missing information that CBI wants from banks, we are trying to coordinate that every month we are calling a meeting.
We are also working on other issues — to ensure that the process of disciplinary action against bank managers of banks in case of a wrong doing is done quickly. We have asked banks to report anything fishy like this in time and we then will ask for further report and take disciplinary action immediately, if required.
What is the next phase of financial inclusion ?
After the opening of bank accounts, banks are now providing the promised overdraft facility. Already about 1.25 lakh ODs have been given under the scheme. Similarly under the MUDRA scheme, 20 lakh loans have been given in the first four months and the total amount disbursed is Rs 14,000 crore by private, public and regional rural banks. So we have got five schemes for financial inclusion, including the two insurance schemes and one pension scheme. The response to the Atal Pension Yojana is not so much as we expected it to be, so we need to push the product by appointing more private agents.
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