Piyush says govt to back banks in hour of cri­sis

Holds talks with chiefs of state-run banks

Mail Today - - MY BIZ - By Mail To­day Bureau in New Delhi

FI­NANCE Min­is­ter Piyush Goyal on Thurs­day as­sured all pos­si­ble help from the gov­ern­ment to strengthen the 11 pub­lic sec­tor banks that have been placed un­der the RBI’s 'Prompt Cor­rec­tive Ac­tion' frame­work to check their de­te­ri­o­rat­ing fi­nan­cial health.

The RBI has put re­stric­tions on the dis­tri­bu­tion of div­i­dends, re­mit­ting of prof­its and giv­ing out loans by these banks. Be­sides, they have been stopped from ex­pand­ing their branch net­works and need to main­tain higher pro­vi­sions. Man­age­ment com­pen­sa­tion and di­rec­tors' fees are also capped. The gov­ern­ment may have to in­fuse more cap­i­tal into these banks.

Goyal, who was ear­lier this week given tem­po­rary charge of the fi­nance min­istry until Arun Jait­ley re­cov­ers from the kid­ney trans­plant surgery that he has un­der­gone, met heads of the 11 pub­lic sec­tor banks here on Thurs­day.

“Over the next few days we will en­sure that the cen­tral gov­ern­ment gives ev­ery pos­si­ble sup­port to fur­ther strengthen the re­solve of these banks to come out of PCA frame­work as quickly as is pos­si­ble,’’ Goyal told jour­nal­ists af­ter the meet­ing. The 11 banks un­der PCA are Dena Bank, Al­la­habad Bank, United Bank of In­dia, Corporation Bank, IDBI Bank, UCO Bank, Bank of In­dia, Cen­tral Bank of In­dia, In­dian Over­seas Bank, Ori­en­tal Bank of Com­merce and Bank of Ma­ha­rash­tra.

Goyal said the meet­ing was very use­ful to un­der­stand what has tran­spired over the last 1213 years in the bank­ing sys­tem. ...the 11 banks were rep­re­sented at the high­est level. Ev­ery one of the bankers spoke of solutions go­ing beyond his­tory... They are go­ing to work through the day and meet me again late in the evening to pre­pare the ac­tion agenda on a case by case ba­sis, he dis­closed.

Ear­lier in the day, Goyal said he would en­deav­our to quickly put on track the bank­ing sec­tor, which has been marred by scan­dals and bad debts that threaten to have reper­cus­sions for the broader econ­omy.

HANDS ON: Act­ing fi­nance min­is­ter Piyush Goyal gets feed­back from pub­lic sec­tor bank chiefs on Thurs­day in Delhi.

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