INSUBCONTINENT EXCLUSIVE:
Sitharaman will meet the heads of PSU banks on Thursday to discuss merger-related issues and review their preparedness to execute the
process within the stated timeline of April 1, 2020."Tomorrow's PSB meeting will take up some of the key issues which relate to passing of
low cost of borrowing and NPA settlement, doorstep banking and also the merger execution strategies to be taken up by the merging and anchor
banks to iron out glitches," a source said.The meeting will be held under the chairmanship of Ms Sitharaman along with banking secretary
Rajeev Kumar.This meeting will take place after the general review meeting on follow-up action with respect to RBI rate cuts, introduce
repo-rate linked loan products to step up affordable credit that will take place on the same day
One time settlement policy on NPAs will also be discussed including door step banking
Secretary, Financial services, will chair this meeting and the FM will be briefed on this meeting.Another issue on the agenda of Thursday's
meeting could be one-time settlement policy on NPAs, including doorstep banking.Consolidating the 10 banks into four and converting them
into 'NextGen banks', the Finance Ministry has decided to merge United Bank of India (UBI) and Oriental Bank of Commerce (OBC) with Punjab
National Bank (PNB) to give birth to India's second largest public sector bank after the State Bank of India (SBI).The PNB merger, which
will make the bank bigger than Bank of Baroda (BoB), will come into effect from April 1 next year
Besides PNB merger, Canara Bank and Syndicate Bank will also be merged into one.Union Bank of India will amalgamate with Andhra Bank and
Corporation Bank while Indian Bank will merge with Allahabad Bank.On Wednesday, Indian Bank received the board approval for the merger with
Earlier on Monday, Allahabad Bank's board had also approved the merger proposal with Indian Bank, to make the amalgamated entity the
seventh largest public sector lender of the country.Canara Bank board has given approval for the merger with Syndicate Bank
Canara Bank has been designated as the anchor bank in this amalgamation.From October 1 loans will be linked to external benchmarks move from
the marginal cost of funds based lending rate (MCLR) regime
While most private banks are waiting for the September 30 deadline, some banks such as Citibank have already adopted external benchmarking,
linking its loan products to the three-month treasury bill.Though several benchmarks are available, most banks are opting for the repo rate
This is because repo is more stable compared to other benchmark rates, which change daily
These changes are only for floating rate loans.So, while home loans and working capital loans will shift to the new regime, rates of auto
loans and personal loans will remain unchanged.The RBI in July allowed domestic banks to directly sell their bad loans (NPAs) in
manufacturing and infrastructure sectors to investors abroad as part of one-time settlement (OTS) exercises which will allow overseas
investors to take direct loan exposure to Indian corporates.The defaulters, or stressed borrowers, can sell their assets in accordance with
the OTS scheme, in order to raise external commercial borrowing (ECB) from abroad to repay domestic loans
This can ease off pressure on NPAs and can also help companies raise money on lower costs.Get Breaking news, live coverage, and Latest News
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