Finance minister Nirmala Sitharaman says bank merger plan on track

Finance Minister Nirmala Sitharaman, on February 26, said that there is no uncertainty related to the merger of Public Sector Banks (PSBs).

"There are no uncertainties about the bank merger. Discussions are going on about the convenience with which they are doing it. I must thank all the banks because through their boards they have taken that call," the Finance Minister said.

Speaking at the launch of EASE 3.0 reform agenda, Sitharaman said that the government was  conscious of the extra load on banks in terms of the kind of demands that the Finance Ministry has put on them.

"I have asked them to reach out to 400 districts, I have asked them to reach out to MSMEs and restructure their loans. So there is a lot of core banking work which they are undertaking," Sitharaman said.

The Finance Minister said that the core banking exercise of public sector lenders goes on along with the merger exercise.

In August, the government unveiled a mega merger plan for PSBs, amalgamating 10 banks into four.

The consolidation would bring down the total number of public sector banks in the country to 12, down from the 27 operating in 2017.

Oriental Bank of Commerce and United Bank will be merged with Punjab National Bank. Canara Bank would be merged with Syndicate Bank, while Andhra Bank and Corporation Bank will be merged with Union Bank of India. The fourth one will be the merger of Indian Bank with Allahabad Bank.

However, the government is yet to issue a  notification in relation with the amalgamation scheme, leading to concerns over delay in the process that was supposed to take place by April 1.

Sitharaman said that the Micro, Small and Medium Enterprises' Minister Nitin Gadkari reviewed the status report on the restructuring of loans for the sector by lenders.

"A few pending cases which are still lying with them, inclusive of those 'loan in 59 minutes' that were sanctioned in principle but not followed up further, every one of these MSME requests must be cleared by March 15," Sitharaman said.

The government had launched the 'PSB Loans in 59 Minutes' web portal in November 2018 to provide loans of up to Rs 1 crore to MSMEs in less than an hour.

After July Budget last year, the government had announced that those stressed assets as on January 1, 2019 of MSMEs would not be declared as non-performing assets.

"That provision existed till December 31, 2019, which we had extended till March 31, 2020 was further extended till December 31, 2020. On that the banks had given us the information on how much they had restructured," Sitharaman said.

Sitharaman added that more than 5.53 lakh stressed Micro, Small and Medium Enterprises (MSMEs) accounts have been identified as of January 6.

"Of these (stressed MSME accounts), close to 5.28 lakh have been restructured. The rest are to be cleared by March 15," she said.

The Reserve Bank of India (RBI) extended the one-time restructuring deadline offered to banks towards MSME loans from March 31, 2020 to December 31, 2020.

The Finance Minister informed that the government has been closely monitoring the impact of the coronavirus on Indian enterprises.

She also announced that information on the 'Vivaad Se Vishwas' scheme, which was announced in the Budget speech, will be disseminated and used by the PSBs.

The minister said that PSBs need to provide dedicated services at the branch level and connect with customers better.  Sitharaman also said that customers of PSBs will be given better access to the officials of their respective branches.

"Every customer will be given a sure date from all banks as to when they can speak to them," said Sitharaman.