Gyan Sangam-II: Bankers huddle to brainstorm

The second edition of a two-day retreat, Gyan Sangam, will outline the reform agenda for the coming year for state-owned banks.

The event follows Finance Minister Arun Jaitley's Budget statement that the government will unveil a road map for consolidation in public sector banks.

The event, to be held at the State Bank of India academy in Gurgaon, will be attended by officials from the ministry of finance and senior managers of public sector banks, insurance companies and financial institutions. On the agenda are mergers, bad debt and credit growth.

"The objective of this retreat is to arrive at a common understanding among professionals, regulators and the government on reforms required in public sector banks," a finance ministry official said on Thursday.

Reserve Bank of India Governor Raghuram Rajan will talk on asset quality review, a measure that hit earnings of public sector banks in the third quarter as they set aside more money to cover bad loans.

The State Bank of India, the country's largest bank, recognised 50 per cent of its non-performing assets to be declared under the asset quality review, while Oriental Bank of Commerce recognised 80 per cent NPAs required to be declared.

RBI on Tuesday allowed banks to recognise some of their assets like real estate, foreign currency and deferred tax, reducing the extra capital needs of state-owned banks by 15 per cent. The move is aimed to align the regulatory capital of banks with the Basel-III standards.

 

The participants have been divided into five working groups: mergers and acquisitions, bad debt management, technology, digital and financial inclusion, and credit growth. Arun Tiwari, chairman of Union Bank, will make a presentation on risk management and State Bank of India Chairperson Arundhati Bhattacharya on the digital revolution.

Unlike the previous year, the event will not be addressed by Prime Minister Narendra Modi. At last year's Gyan Sangam in Pune Modi had promised banks there would be no interference from any government functionary in their commercial decisions.

Seven months after the first Gyan Sangam, the government came out with a strategy, Indradhanush, to revive public sector banks. It relies on professional appointments, a bank board bureau, re-capitalisation, de-stressing, empowerment, accountability and governance reforms.

The government has infused Rs 25,000 crore capital in state-owned banks in 2015-16, with a provision for another Rs 25,000 crore infusion in the next financial year.

This, however, is inadequate for the scale of the stress in the system and state-owned banks are expected to make a pitch for higher capitalisation.