Tag: Nirmala Sitharaman

Government gives hefty pension boost to bank employees, BFSI News, ET BFSI

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MUMBAI: The government has announced changes to the pension scheme of public sector banks. For family members of employees, the ceiling on family pension has been lifted and, for current employees, the banks’ contribution to the scheme has been increased by 4 percentage points to 14% from earlier 10%.

“Earlier, the scheme had slabs of 15%, 20% and 30% of the pay that a pensioner drew at that point of time. It was capped subject to a maximum of Rs 9,284. That was a very paltry sum and finance minister Nirmala Sitharaman was concerned and wanted that to be revised so that family members of bank employees get a decent amount to survive and sustain,” said Debashish Panda, secretary in the department of financial services, at a press conference held by Sitharaman.

The second change is that the employer contribution to the New Pension Scheme (NPS) corpus has been enhanced to 14% of the pay from 10% earlier.

The changes are in continuation of the 11th bipartite settlement signed by banks with unions on wage revision last year. In addition to the wage revision, there was a proposal for enhancement in family pension and also the employer’s contribution under the NPS.

A statement issued by the government said that thousands of families of public sector banks will be benefited by the enhanced family pension scheme, while increase in employer contribution will provide increased financial security to the bank employees under the NPS.

Those employees who have been with banks before 2004 are eligible to a defined benefit pension scheme where the monthly payout is determined by a formula based on their last drawn wage. These employees will benefit from the increase in pension limits.

Employees who have joined after 2004 are part of the NPS where the employees and the banks contribute toward a retirement corpus. After retirement, the corpus must be used to buy an annuity from an insurance company that will provide monthly income. The extent of monthly income depends upon the size of the corpus and cost of annuity.

With the fall in interest rate, the returns through annuity schemes have been shrinking, resulting in a call for higher contribution. The insurance regulator is also working with the industry to develop an inflation-linked annuity scheme.



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Bank employees’ pension pay-out hiked to 30% of last-drawn pay, BFSI News, ET BFSI

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Finance minister Nirmala Sitharaman detailed the way ahead for India’s public sector banks as part of her government’s EASE 4.0 policy. EASE 4.0 or Enhanced Access and Service Excellence is the Centre’s reform agenda of public banks aimed at institutionalising clean and smart banking.

Sitharaman met heads of PSBs to review financial performance of the lenders and progress made by them to support the economy battered by COVID-19 pandemic.

At the presser post launch in Mumbai, Finance Secretary Debashish Panda announced changes to the pension pay-outs of Public Sector Banks.

The changes instituted are set to increase the pension pay-out to bank employees, with all of them set to get an even 30% of their pay. The Centre has also asked banks to increase the employer contribution to the pension corpus to 14%, from the current 10%.

“Pension pay-outs to bank employees could increase to Rs 30,000-Rs 35,000 from the earlier cap of Rs 9284,” Panda said.

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Finance minister, BFSI News, ET BFSI

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MUMBAI: Union finance minister Nirmala Sitharaman on Wednesday said it is too early to say if there is a lack of demand for credit and announced a district-wise outreach to be undertaken by banks to help credit growth from October.

A push to credit growth from such outreach efforts will also help the momentum set by the stimulus packages, which have been extended by the government since the onset of the pandemic.

It can be noted that in late 2019, banks had conducted the “loan melas” in 400 districts to push up sagging credit growth. Even now, the credit growth is stuttering at around 6 per cent.

“I think it is too early to conclude whether there is a lack of demand… I don’t think it is time yet to conclude that there is no credit pick-up. Even without awaiting indications, we have taken steps to ramp up credit,” Sitharaman told reporters here.

She noted that over Rs 4.94 lakh crore was disbursed by the banks between October 2019 and March 2021 through the outreach initiatives undertaken by them.

“This year too sometime in October, there will be a credit outreach in every district of the country,” she said.

Sitharaman added that the government had announced that credit up to Rs 1.5 lakh will be given to borrowers through NBFC-MFIs.

“In order to keep up the momentum of stimulus that we are periodically giving, we have also asked banks to go out and give credit,” she said.

Meanwhile, Sitharaman said there is a need to ramp up credit growth in the eastern pockets of the country in states like Jharkhand, West Bengal, and Odisha, where the populations are displaying a higher propensity to deposit money in current and savings accounts.

Banks have also been asked to create state-wise plans for northeastern states to help the logistics sector and exporters.

Apart from that, Sitharaman, who took a review meeting with the chiefs of all the 12 state-run lenders, said banks have been asked to reach out to exporters at the district level to help push the “one district, one export” message of Prime Minister Narendra Modi.

Besides, the finance minister said banks have also been asked to look into the demands of the fintech sector.



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FM asks India Inc to look beyond banks for finance, BFSI News, ET BFSI

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Mumbai: Finance minister Nirmala Sitharaman told India Inc on Tuesday that there is a move to enable the industry to meet its funding needs from markets rather than banks. Among alternate financing measures, the government is looking at allowing insurance bonds instead of bank guarantees, a senior government official said.

In her first visit to Mumbai after the second wave of the pandemic, the finance minister addressed industry leaders at a Confederation of Indian Industry (CII) interaction on Tuesday evening. Later, she attended a dinner meeting with industry chiefs, including Tata Group chairman N Chandrasekaran.

The FM said that industry dependence on banks would be further reduced by the operationalisation of the new development finance institution, which will take over long-term lending and also provide competition to banks. The FM emphasised the need for government and industry to work together to “create India’s own equity capital”.

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EASE 4.0 reforms agenda: PSBs to transform into ‘digital-attacker banks’

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Finance Minister Nirmala Sitharaman on Wednesday unveiled a roadmap to transform all public sector banks (PSBs) into “digital-attacker banks”, working hand-in-hand with key constituents of the financial services ecosystem to offer industry-best customer experience.

The fourth edition of the EASE (Enhanced Access and Service Excellence) reforms agenda for PSBs has been unveiled in the backdrop of the amalgamation of 13 PSBs into 5 PSBs being successfully completed over the last two years.

EASE 4.0 commits PSBs to tech-enabled, simplified and collaborative banking, the Indian Banks’ Association (IBA) said in a statement, adding that it aims to further the agenda of customer-centric digital transformation and deeply embed digital and data into PSBs’ ways of working.

24×7 banking

According to the IBA statement, under EASE 4.0, the theme of new-age 24×7 banking with resilient technology has been introduced to ensure uninterrupted availability of banking services by ensuring 24×7 availability of select banking channels, improving the reliability of technology platforms, and aligning internal processes in the PSBs to deliver such services.

In addition to the aforementioned new themes, several other new reforms will be added to existing themes, such as increased use of digital and data for agriculture financing through partnerships with third parties for alternative data exchange, driving impetus on digital payments in semi-urban and rural areas, at-scale adoption of doorstep banking services for PSB customers, etc.

Focus on North-East

Banks have also been asked to come up with specific schemes for the North-East, Sitharaman told reporters.

She also highlighted that the high CASA deposits in the Eastern States are a matter of concern and said banks should give a facility in the region for greater credit expansion.

While she did not comment on questions relating to privatisation of public sector banks and general insurance companies, she stressed that government will have a bare minimum presence in strategic sectors. “Banks, financial services, and insurance have been identified as strategic sectors,” she stressed.

Bad bank

Sitharaman said the proposed bad bank is very close to getting a licence. Panda said the Indian Banks’ Association has applied to the RBI and a licence for the bad bank is expected soon. Projects have also been identified, he said.

The Finance Minister also stressed that under the National Monetisation Pipeline there will be no change of ownership and ownership of assets will still remain with the Government.

“These are brownfield assets but are underutilised. If the government has to utilise it better, it has to be through monetisation process wherein it will be put to effective use with a bit more addition to spruce it up to bring it up to utilisation,” she said in response to a query.

Taking on criticism over the government’s ₹6-lakh crore monetisation plan, she pointed out that it was Congress-led governments that had raised ₹8,000 crore by monetising the Mumbai-Pune expressway and had also floated the request for proposal for the New Delhi Railway Station.

‘Inflation will cool’

Revenue Secretary Tarun Bajaj said that it is expected that inflation will come down once the crops are harvested.

“The RBI has come out with a guidance on inflation and said that the inflation, which is a little on the up, will cool down in some time, and we also feel that once the crops come out, inflation should come down,” he said, adding that it would remain within the target of four per cent to six per cent.

He also noted that the government has taken a number of supply-side measures such as reduction in the duties on a number of products, including edible oil.

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Banks to start credit outreach programme later this year: Finance Minister

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Banks are set to start a credit outreach programme later this year under which they would go to every district of the country, Finance Minister Nirmala Sitharaman said on Wednesday, adding that they have also been asked to provide sector-specific support.

Wrapping up her two-day trip to Mumbai, the Finance Minister said she has asked banks to interact with export promotion agencies to help address exporters’ requirements and also look at providing support to sunrise sectors as well as fintechs.

Banks have also been asked to come up with specific schemes for the North-East, Sitharaman told presspersons.

She also highlighted that high CASA deposits in the eastern States are a matter of concern and said banks should give a greater credit expansion facility in the region.

The Finance Minister also noted that public sector banks have done well collectively and are in a position to go to the market to raise funds.

Debasish Panda, Secretary, Department of Financial Services, said banks were in the process of raising about Rs 12,000 crore from the markets this fiscal.

While she did not comment on questions relating to privatisation of public sector banks and general insurance companies, she stressed that the government will have bare a minimum presence in strategic sectors.

“Banks, financial services and insurance have been identified as strategic sectors,” she stressed.

‘Bad bank close to getting a licence’

Sitharaman said the proposed bad bank is close to getting a licence. Panda said the Indian Banks’ Association has applied to the RBI and a licence for the bad bank is expected soon. Projects have also been identified, he said.

National Monetisation Pipeline

The FM also stressed that there will be no change of ownership under the National Monetisation Pipeline and ownership of assets will remain with the Union Government.

“These are brownfield assets but are under utilised,” she said in response to a query.

Taking on Opposition concerns, she questioned who had monetised the Mumbai-Pune Corridor and taken out a Request for Proposal for the New Delhi Railway Station.

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Key Highlights of Finance Minister’s meeting with the heads of PSU banks., BFSI News, ET BFSI

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Nirmala Sitharaman

Union Finance Minister, Nirmala Sitharaman on Wednesday met with the heads of the Public Sector Banks to review their financial performance and the progress made in supporting the pandemic hit economy.

Sitharaman took note of the situation of the PSBs and their progress around the restructuring 2.0 scheme announced by the Reserve Bank of India.

“We Reviewed the annual performance of Public Sector banks and also the implementation of announcements of various COVID-19 related packages and Aatmanirbhar Bharat package,” FM Nirmala Sitharaman said.

The minister also declared the results of Ease 3.0 (Enhanced Access and Service Excellence) Index for 2020-21 and launched the Ease 4.0.

Ease is a common reform agenda for PSBs aimed at institutionalising clean and smart banking.

This is the first meeting of the Finance Minister with the heads of PSBs since the beginning of the Covid-19 pandemic.

Following are the key highlights

From Nirmala Sitharaman, Finance Minister

  • Nature of banking is evolving rapidly, and the industry has realised the changing requirements of the sector.
  • Collectively, PSBs have done well and have shown that they are in a position to come to the market and raise funds.
  • Despite the customer requirements during COVID-19 pandemic, work of amalgamation of banks has not suffered.
  • Banks & financial services have been identified as strategic sectors. Govt will have a bare minimum presence.
  • Industries have the option of raising funds outside the banking sector.
  • There will be credit outreach in every district of the country this year.
  • Banks have been asked to come up with special plans for northeast states focusing on logistics, exports from the area.
  • Banks expressed concerns about CASA deposits piling up in eastern areas including Bihar, WB, Jharkhand. Banks should provide facilities to provide credit flow for business development in these regions.
  • Requested the public sector banks to address the needs of exporters. They have been directed to interact regularly with Federation of Exporters Organisation.
  • Banks are raising funds from different avenues. This new aspect needs to be studied to target credit where it is needed.
  • Customer Service of banks has not suffered even during the pandemic.
  • Sunrise sectors and fintech need banking support.
  • Fintech can provide technological help to banks. Fintechs and the banking sector can mutually benefit each other.

From Tarun Bajaj, Revenue Secretary

  • Direct listing of companies on the overseas platforms is under consideration.

Debashish Panda, DFS Secretary

  • PSBs’ contribution for employee pensions under NPS hiked to 14 pc from 10 pc earlier.
  • Pension payouts to bank employees could increase to ₹30,000- ₹35,000 from the earlier cap of ₹9284.

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Finance Ministry exploring insurance bonds as alternative to bank guarantees, BFSI News, ET BFSI

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The government is considering introducing insurance bonds as an alternative to bank guarantees, Finance Secretary T V Somanathan said here on Tuesday. Somanathan made the announcement during a meeting between industry captains and Finance Minister Nirmala Sitharaman, who is on a two-day visit to the financial capital.

“Government is exploring the possibility of instituting insurance bonds as alternatives to bank guarantees,” an official statement said.

Bank guarantees are usually asked for while extending a loan and typically require a collateral. An insurance bond is also a surety but it does not require any collateral.

As per reports last year, insurance regulator Irdai was also looking at the option of insurers offering surety bonds in the context of road projects.

(With inputs from PTI)

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FM to meet CEOs of public sector banks on Wednesday

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Finance Minister, Nirmala Sitharaman, will meet heads of public sector banks (PSB) on Wednesday to review the financial performance of the lenders and progress made by them in supporting the pandemic-hit economy, sources said.

The meeting with MD and CEOs of PSBs assumes significance given the importance of the banking sector in generating demand and boosting consumption.

Recently, the finance minister said the government is ready to do everything required to revive and support economic growth hit by the Covid-19 pandemic.

Agenda

The meeting is expected to take stock of the banking sector and its progress on the restructuring 2.0 scheme announced by the Reserve Bank of India (RBI), the sources said, adding that banks may be nudged to push loan growth in productive sectors.

The revamped ₹4.5 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) would also be reviewed during the meeting, likely to be held in Mumbai, the sources said.

Besides, the finance minister is expected to take stock of the bad loans or non-performing assets (NPAs) situation, and discuss various recovery measures by banks, they said.

Also see: Protect dealers from sudden MNC exits, FADA tells govt

As a result of the government’s strategy of recognition, resolution, recapitalisation and reforms, NPAs have shown a declining trend, from ₹7,39,541 crore on March 31, 2019 to ₹6,78,317 crore on March 31, 2020 and further to ₹6,16,616 crore as of March 31, 2021 (provisional data).

At the same time, comprehensive steps were taken to control and effect recovery in NPAs, which enabled PSBs to recover ₹5,01,479 crore over the last six financial years, the government informed the parliament recently.

Besides, Sitharaman is expected to declare the results of Ease 3.0 Index for 2020-21, they said, adding that PSBs would be rated on various indexes for the year.

Launched in January 2018, Enhanced Access and Service Excellence (Ease) is the common reform agenda for all public sector banks aimed at institutionalising clean and smart banking.

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FM to launch Ubharte Sitaare Fund in Lucknow on Saturday, BFSI News, ET BFSI

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NEW DELHI: Finance minister Nirmala Sitharaman will launch an ambitious ‘Ubharte Sitaare Fund‘ for export-oriented firms and startups on Saturday. The fund has been set up by Exim Bank and SIDBI.

“Nirmala Sitharaman will, on Saturday, August 21, 2021 launch the Ubharte Sitaare Fund for export-oriented small and mid-sized companies jointly sponsored by Exim Bank and SIDBI,” Exim Bank said in a release on Thursday.
It will be launched in Lucknow, Uttar Pradesh.

In her Budget speech last year, Sitharaman had mentioned that MSMEs are vital to keep the wheels of economy moving. They also create jobs, innovate and are risk takers.

Accordingly, India Exim Bank‘s Ubharte Sitaare Programme (USP) identifies Indian companies that have the potential to be future champions in the domestic arena while catering to global demands, said the release.

The fund is expected to identify Indian enterprises with potential advantages by way of technology, products or processes along with export potential, but which are currently underperforming or unable to tap their latent potential to grow.

The fund is a mix of structured support, both financial and advisory services through investments in equity or equity like instruments, debt (funded and non-funded) and technical assistance (advisory services, grants and soft loans) to the Indian companies.

Exim Bank and SIDBI have developed a pipeline of over 100 potential companies, including those in Uttar Pradesh across various sectors such as pharma, auto components, engineering solutions, agriculture, and software.

The finance minister will also release the India Exim Bank’s study on ‘Exports from Uttar Pradesh: Trends, Opportunities and Policy Perspective’.

India Exim Bank’s deputy managing director Harsha Bangari and SIDBI’s chief managing director Sivasubramanian Ramann, small business owners and startup founders and other dignitaries from Uttar Pradesh will also be present for the occasion.

Besides, she will release India Exim Bank’s publication on ‘Indian Sports Goods Industry: Strategies for Tapping the Export Potential’.

The study realises the importance of boosting sports in economic growth, analyses the global and Indian sports goods industry, identifies export potential of the segment as well as discusses the challenges faced by exporters, said the release.



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