PSB conclave to focus on governance, NPA resolution, credit revival

Job growth, consolidation also on the agenda

With a Rs 2.11-lakh crore capital infusion plan in hand, top executives of public sector banks (PSBs) will brainstorm with officials and experts at Gurugram over the weekend about governance issues, experience with insolvency cases, recoveries and credit demand revival.

A conclave titled Vichar Manthan will see presentations by seven groups, each headed by the managing director or chief executive of a PSB. This is the third such gathering of PSB executives, officials, and experts. Earlier conclaves were held in 2014 and 2016.  

PSB executives said capital commitment was just one part, the focus now was on improving governance and efficiency. The deliberations will focus on governance, human resource issues, and turnaround. The aim is to enhance lending capacity and support job growth and secure better value for stakeholders, including the government.

Union Finance Minister Arun Jaitley is expected to address the two-day conclave at the State Bank of India (SBI) Academy in Gurugram. Early sessions on Saturday at the conclave will dwell on lessons from nine years of loan growth covering days of heady expansion, the effects of the slowdown, and stress recognition.

The groups will make presentations on themes like responsible and responsive banking and the digital push for financial inclusion.

A senior bank executive said the government had accorded priority to increasing lending to medium, small and micro enterprises as they had a higher potential for employment creation. This will be one theme for a presentation with experience sharing on need assessment, monitoring, prompt support for units facing strain, and reducing risks of slippage.

There will also be a discussion around human resources, given the large-scale retirements at the senior level, and practices. Plus, a rapid shift in the skills requirement at the entry level due to digital banking and expansion of networks are expected to come up for discussion to flesh out immediate and long-term strategies.  

Of the Rs 2.11 lakh crore crore capital infusion plan, Rs 76,000 crore will come in through budgetary support and bank stake sales, and Rs 1.35 lakh crore through bond sales. While making the announcement, Jaitley had said the recapitalisation process would be followed by a series of reforms to make state-run banks more accountable. 

At the end of 2014, the government organised a similar conclave at the National Institute of Bank Management in Pune for banks and financial institutions, called Gyan Sangam. Its second edition was held in March 2016 at the SBI Academy, after which the government said it had embarked on the third phase of reforms in PSBs that would look into all aspects, including consolidation. 

Last week, the government announced the structure of an alternative mechanism to examine proposals for amalgamation. The mechanism, to be headed by the finance minister, may direct PSBs to examine consolidation proposals.

There are now 20 PSBs other than SBI. The banking scenario has changed since bank nationalisation in the 1970s and 1980s with an increased presence of private banks, non-banking finance companies, regional rural banks, payments banks, and small finance banks. 

The mechanism is expected to facilitate the creation of strong and competitive banks in the public sector. These entities will be better able to meet the credit needs of a growing economy and absorb shocks with an improved capacity to raise resources without depending unduly on the exchequer.

Bankers’ presentation on following themes

Credit growth: Lessons from past, future strategy

Stressed assets: Recoveries and resolution 

Digital banking: Deepening financial inclusion

MSME: Credit support, creating jobs 

Capital: Leveraging for take-off