New Delhi: Newly appointed Finance Minister Piyush Goyal vowed 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.
Goyal, who was earlier this week given temporary charge of the finance ministry until Arun Jaitley recovers after undergoing a kidney transplant, met heads of public sector banks here on 17.
“We will ensure the very orderly growth of the industry and highest levels of probity and accountability that is expected of public sector banks,” he said after the meeting.
Piyush Goyal expressed confidence that the 11 public sector banks (PSBs) that are under RBI’s Prompt Corrective Action (PCA) framework would be able to overcome their “legacy issues” in a very short period of time.
“The Centre would over the next few days ensure that every possible support is given to strengthen the resolve of these banks to come out of the PCA framework as quickly as possible,” Goyal told reporters after a meeting with the heads of 11 PSBs who are under RBI’s PCA framework.
These 11 banks will be able to continue to serve the common man through more aggressive banking, maintaining the highest standards of ethics and integrity, Goyal said.
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.
PCA is the process or mechanism to ensure that banks don’t go bust. Under the process, RBI has put in place some trigger points to assess, monitor, control and take corrective actions on banks which are weak and troubled.
Goyal, considered a close associate of Jaitley, has not made a big show of getting additional charge of the finance ministry and largely operates from Rail Bhawan.
Goyal, who is the minister for railways and coal, said the priority is “to ensure that we can quickly get entire banking system on its feet and shed the legacy that was inherited by this government in 2014.”
The legacy he referred to was apparently the indiscreet loans given under the previous UPA government. Many companies, especially in the power, steel and telecom sectors, have been unable to pay down their debts due to sectoral issues and slowing economy.
To compound the problem, there has been a string of scandals that have come to light over the past couple of months, hurting the image of banks the heart of the economy.
“With the intelligent efforts of all my colleague bankers, lakhs of employees of public sector banks and all the stakeholders of banking system working and under the guidance of RBI, we will ensure very orderly growth of the industry and highest levels of probity and accountability that is expected of public sector banks,” Goyal said.
Under the new rules for bad debt resolution that the RBI implemented in March 2018, banks can no longer resort to various loan restructuring schemes to delay the recognition of non-performing assets (NPAs).