Union Finance Minister Nirmala Sitharaman addressed the nation at 4 pm on Friday. Speaking to the media, she announced a slew of reforms to streamline the economy and boost the banking sector.
A major decision to amalgamate 10 public sector banks into 4 banks was taken up. Now the tally of public sector banks in the country has come down to 12 from 27 such banks in 2017. The government also vowed to infuse Rs. 55,250 crore as an upfront capital in the Public sector banks.
Finance Minister Nirmala Sitharaman: After today's announcement (merger of banks) post consolidation, India will now have 12 Public Sector Banks from 27 Public Sector Banks. pic.twitter.com/bTTGQva1Cm
— ANI (@ANI) August 30, 2019
Major Announcements of the Address:-
- Punjab National Bank, Oriental Bank of Commerce and United Bank will be merged into a single entity. This will make it the second-largest Public Sector Bank in the country with Rs. 18 lakh crore business.
- Union Bank of India will be merged with Andhra Bank and Corporation Bank. This will bloom into a business of Rs. 14.6 lakh crore.
- Canara Bank will be merged with Syndicate Bank. This will translate into the creation of fourth-largest Public sector bank of the nation and business of Rs. 15.2 lakh crore.
- Allahabad Bank and Indian Bank will be merged to create a business of Rs. 8.08 lakh crore.
- Special agencies will be set up to monitor the loan amounting above Rs. 250 crores to prevent fraud cases.
- The government will infuse Rs. 55,250 crore in the Public Sector Banks for credit growth & regulatory compliance. Central Bank of India Rs 3,300 crore, Bank of Baroda Rs 7,000 crore, Indian Bank Rs 2,500 crore, PNB will get Rs 16,000 crore, Union Bank Rs 11,700 crore, Canara Bank Rs 6,500 crore, Indian Overseas Bank Rs 3,800 crore and Uco Bank Rs 2,100 crore.
It has also been reported that the government is trying to create next-generation banks. Therefore the government has separated the procedure of sanctioning and monitoring of loans. All the decisions can be seen in the background context of Narendra Modi‘s target of making India a $5 trillion economy.
In the previous week also, Nirmala Sitharaman had announced various lucrative fiscal packages to promote growth. One of the landmark decision was the withdrawal of “Angel-Tax”. Finance Minister had also promised to remove “tax-terrorism” form the country and assured everyone that the government is continuously looking after the needs of all stakeholders.
The big gun decisions by the Finance Ministry can be seen in the light that India is currently witnessing economic slowdown of a large scale. Earlier, Rajiv Kumar (NITI Aayog) also pulled everyone’s attention towards the economic crisis through his address.