Cabinet Approved the Merger of Public Sector Banks

Cabinet Approved the Merger of Public Sector Banks

On Friday Finance Minister Arun Jaitely said in Lok Sabha that there would be no loss of jobs due the merger of public sector banks. Earlier this week, the cabinet approved the merger of Vijya Bank and Dena Bank with Bank of Baroda.

Jaitely said that there would be no loss of jobs due to the merger of the banks and that the move would create a bigger entity like the State Bank of India. He also added that the costing of lending could also become cheaper.

During the question hour, the minister said “Out of 21 public sector banks 11 are under Prompt Corrective Action (PAC) framework”. PAC is initiated against banks that have high level of non-performing assets (NPAs).

Replying to supplementary questions, Jaitely said “The curve of non-performing assets would go down and that the insolvency and bankruptcy code has helped in bringing back around Rs. 3 Lakh Crores into the system”.

He added that the State Bank of India and other Public Sector Banks have been making operational profits. They incurred losses due to provisioning for non-performing assets based on PTI report.

With regards to recapitalisation of Public Sector Banks (PSBs), the ministers said that Rs. 51,533 Crores has been infused into them in the current financial year till December 31.

“In the budget estimates of financial year 2018-19, Rs.65,000 Crores has been allocated for recapitalisation of PSBs and an amount of Rs. 51,533 Crores has been infused in PSBs till December 31, 2018” he said.

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The minister also said that in recent past, Rs. 90,000 Crores was allocated in the Union Budget and infused in various PSBs by the government during financial year 2017-18.

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