NEW DELHI: The heads of Public Sector Banks are likely to meet the Reserve Bank of India (RBI) Governor (RBI) next week to discuss on the future roadmap for the banks including a roadmap for bank recapitalisation. “The RBI governor will be meeting PSBs heads next week. The discussion will be on deciding the roadmap for the banks under PCAs and on the basis of that the government will decide the recapitalisation schedule,” a senior official from the Department of Financial Services told this publication.
The secretary of the Department of Financial Services is also likely to be present in the meeting, the official added. In the budget, the government has proposed to allocate an additional Rs 70,000 crore for recapitalisation of public sector banks to give them enough capital to step up their lending and credit disbursement. “This is a very positive development. It will not only enable banks to take care of their capital needs to comply with regulatory requirements but will also help them to step up their lending disbursements. It augurs well for the banking sector,” the RBI governor had said after the post-budget meeting with the finance minister.
Another important issue which is likely to be discussed is stake sale by public sector banks in their insurance entities, which is currently facing valuation hurdles.
The finance ministry had asked banks to de-focus on non-core investment. Banks like Allahabad Bank, Andhra Bank, Bank of India, Indian Overseas Bank and Oriental Bank of Commerce are some of the PSU entities that are looking to exit their joint ventures.
Besides, the RBI governor may also discuss the faster transmission of the three successive repo rate cuts totalling 75 basis points. While many banks including the State Bank of India and Oriental Bank of Commerce followed suit, the transmission rates are still slow.