Pune: To revitalise state-owned financial institutions, over 100 bankers and experts held extensive discussions here Friday at the bankers' retreat 'Gyan Sangam' to draw a reform blueprint to be presented to Prime Minister Narendra Modi tomorrow.
In the first of its kind two-day retreat, which is being attended by PSU bank CMDs, top RBI functionaries and private sector experts, deliberated throughout the day on key issues and problems like rising NPAs, low credit offtake and mergers and acquisition in a bid to come out with solutions.
"All the groups have now started discussing. The discussions are engrossing. We hope that the discussions may continue right up to midnight," Financial Services Secretary Hasmukh Adhia told reporters.
The six separate groups on financial inclusion; leveraging technology; priority sector lending; risk management; strategy for public sector banks; and consolidation of PSBs will make presentations to Modi and Finance Minister Arun Jaitley.
While addressing the participants, Adhia said the six groups should bring "key five doable suggestions from each theme area".
"By tomorrow morning in the plenary they should come out with their presentations," Adhia added.
Earlier in the day, global consultancy firm McKinsey gave presentations on international best practises, he said, adding India could adopt some of them to improve efficiency of banks.
Inaugurating the meeting, Minister of State for Finance Jayant Sinha said the bankers should provide suggestions which could lead the economy to 7-8 percent sustainable and non-inflationary GDP growth.
The NDA government was both pro-poor and pro-business, he said, adding, "so the trade-off has to be managed by ensuring that the public sector banks are able to function commercially while financing the poor as well."
Among others, the Gyan Sangam is being attended by SBI chairperson Arundhati Bhattacharya, Indian Bank's T M Bhasin, Bank of India chairperson V R Iyer, Corporation Bank CMD S R Bansal, IRDA Chairman T S Vijayan, PFRDA chairman Hemant Contractor and RBI Deputy Governors.
Jaitley and RBI Governor Raghuram Rajan will participate in the deliberations tomorrow.
Sinha said the ground-breaking workshop was an unique opportunity to reshape the financial sector for next 10 to 15 years.
"As the changes in the economic environment are taking place at a very rapid pace the reforms are required to be taken up urgently," he added.
Rising bad loans and poor credit offtake are two major challenges facing the banking sector.
"The low credit offtake is an area of concern," Adhia said, adding the bankers would be discussing the strategies to increase it.
It can be noted that in spite of a push to economic growth, there is not enough of demand for credit, leading to credit growth barely rising above the ten percent, which is a five-year low.
During the first nine months of the current fiscal, credit growth has seen single-digit increase at 5.2 percent while deposits have grown at a higher pace of 7.6 percent.
A majority of banks have shifted focus to newer segments, especially in retail lending, to push credit offtake.
Bankers have been pinning hopes on the capacity expansions by corporates. However, fresh capex loan proposals are few and far between.
Adhia said asset quality is another key area of concern and there is a need to improve on risk management of banks.
"Improving risk management, asset management and recovery...This is one of the problem areas for many public sector banks. We would like to learn from each other and help them in building better risk management practises," he said.
In its bi-annual Financial Stability Report, the RBI has flagged the performance of the state-run banks as an area of concern on this count.
Total Gross Non Performing Assets (NPAs) of public sector banks stood at over Rs 2.43 lakh crore as on end- September 2014. The top 30 NPAs account for Rs 87,368 crore or 35.9 percent of total gross NPAs of PSBs.
