Hindustan Times ST (Mumbai) - HT Navi Mumbai Live - - FRONT PAGE - HT Correspondent let­ters@hin­dus­tan­times.com

The govern­ment will set up a panel to con­sider merg­ing some of its more than two dozen banks, fi­nance min­is­ter Arun Jait­ley said on Satur­day, vow­ing to im­prove ef­fi­ciency at state-run lenders, many of which are creak­ing un­der bad debt.

The panel will work with the Banks Board Bureau (BBB) — an in­de­pen­dent body to over­see the func­tion­ing of lenders — to come up with a plan on con­sol­i­da­tion, an idea strongly sup­ported by bankers, Jait­ley said. “You need strong banks rather than numer­i­cally large num­bers,” he said af­ter a two-day an­nual brain­storm­ing event of in­dus­try lead­ers and of­fi­cials from the RBI and min­istry.

State- run banks hold more than two-thirds of as­sets in the coun­try’s bank­ing in­dus­try but they also ac­count for about 85% of bad loans, adding toxic as­sets at a faster pace than their pri­vate sec­tor ri­vals and hurt­ing prof­itabil­ity.

Jait­ley said nurs­ing the staterun banks back to health was a top pri­or­ity for the govern­ment.He said the govern­ment will nei­ther write off loans nor spare wil­ful de­fault­ers, and that the pro­posed bank­ruptcy law will help banks re­cover their loans. The ab­sence of such a law al­lows de­fault­ers to go to court to de­layy or avoid re­pay-py ment. Jait­ley said the stafff at pub­lic sec­tor banksanks will be in­cen­tivised,ntivised, in­clud­ingg of­fer­ing them em­ploy­eem­ployee stock own­er­ship­wn­er­ship pl a n s. Ca m p u s re­cruit­ments­ments will also be en­cour­aged.uraged.

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