This Article is From Mar 12, 2016

Government's PSU Bank Merger Plan Sound: Raghuram Rajan

Government's PSU Bank Merger Plan Sound: Raghuram Rajan
Reserve Bank of India Governor Raghuram Rajan on Saturday praised the government's plan to consolidate PSU banks. Mr Rajan, Finance Minister Arun Jaitley and Minister of State for Finance Jayant Sinha spoke at a press conference after the central bank board meeting earlier in the day.

Here are the highlights:

Arun Jaitley
  • Suggestions with regard to Budget proposals
  • There were discussions on disinvestment, cleaning up of bad loans
  • Explained rationale behind budget decisions to RBI board
  • India's state of export is a cause of concern
  • Decision to recapitalise banks will help to reduce bad loans
  • Revival of sectors will clean up balance sheets
  • Do not want banks to get over-defensive
Raghuram Rajan
  • Comforted by fiscal deficit target
  • There is well-defined process to define wilful defaulters
  • Penalities for wilful defaulters have been strengthened
  • Government’s plan to consolidate PSU banks sound
  • We have to be careful going forward; on one hand we penalise criminal actions (on wilful defaulters)
  • That is not the regulator but the investigative agencies who have to take that up
  • At the same time we don’t indulge in a broad fishing expedition, which then becomes a reason for banks to get worried about loans
Jayant Sinha
  • RBI has done a commendable job in defining different types of accounts