Union Finance Minister, Arun Jaitley and the RBI Deputy Governor SS Mundra were present at the 2nd Annual meeting of board of governors of the Asian Infrastructure Investment Bank(AIIB) held at South Korea. The idea was to actively participate in speedy resolution of bad assets of Indian banks.
"Consolidation of banks was not on the agenda as far as this present meeting is concerned. But I can tell you, we are actively working in that direction," said Jaitley. "We have to plan a model for consolidation which will be region-based so that we have a few strong banks in the west, north, south and east," Vinod Rai said. "That will also avoid branch-based redundancies." Consolidation may happen for three different reasons with three different domains- state, private, and old private sector community dominated banks. The system will work more efficiently if the banks are consolidated to fewer but robust banks. India can witness economic growth rapidly by consolidation of India’s public sector banks.
Spotting job creation investment and credit growth, aids in rebuilding the existing financial system and ranking India as Asia’s third largest economy. 700 billion rupees ($ 10.5 billion) has been earmarked in bank for capital injections from budgets by the Finance Minister, Arun Jaitley, covering 4 years ending March 2019. The focus should be more on state-run banks than private peers who are better structured financially.
At the end of 2016-2017, with the turnover of 6lakh crores, public banks are left overburdened with bad loans. Jaitley has assured that the solution for the same is arriving soon.
As we can see, that 54% of Indian banks are nationalised, 24% is occupied by State bank of India and its associates. 17% by private banks indicating growth and financial stability. 5% of foreign banks have started operating in India