Tag: President

AIBOA appeals to President of India against privatisation of two PSBs

Banking & Finance

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The All India Bank Officers’ Association (AIBOA) has appealed to the President of India to advise the Council of Ministers to rescind the proposed moves to privatise two public sector banks (PSBs) and undertake strategic disinvestment in IDBI Bank.

S Nagarajan, General Secretary, AIBOA, in a letter to President Ram Nath Kovind, emphasised that during the past 51 years, the nationalised banks continuously contributed to the growth of the economy and were instrumental in all developmental activities without exception.

Also read: NARCL to further Govt’s agenda of disinvestment of IDBI Bank, privatisation of PSBs

He observed that PSBs wholeheartedly supported the economic development needs of the country, implementing Government schemes and instructions to benefit the citizens at large.

“The Public Sector Banks (PSBs) have stood the test of time….the wealth created in the nation thorough Public Sector Undertakings and also PSBs need to be protected and promoted,” he said.

The Government is reportedly considering privatising Central Bank of India and Indian Overseas Bank.

Nagarajan noted that during the last 25 years, in order to save the savings of the common people, private sector banks, on their failure to fulfil the obligations, were taken over by PSBs.

“The rescue of the private sector banks from the woes of mismanagement and mal-administration was only through merger with PSBs,” he said.

IDBI Bank

IDBI Bank, which has been continuously serving the financing needs of the nation since 1964 (first as a development financial institution and later as a bank), has been weighed down by bad loans to the tune of nearly ₹36,000 crore, and its present state is due to policy paralysis in the matter of recovery of bad loans, opined Nagarajan.

He underscored that after four years of struggle and collective contributions made by the human assets, right from the sub-staff to the institutional head, the bank is out of red and also free from the prompt corrective action (PCA) and released from RBI restrictions.

Nagarajan alleged that, “The recovery mechanism put in place by successive governments at the Centre have facilitated the borrowers not to pay loan availed by them. While the industry has become sick, the industrialists have become healthier and wealthy.”

ends

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Govt must think of many AIFs, rather than one bad bank: Kotak

Banking & Finance

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Instead of setting up just a single bad bank, the Centre should consider floating multiple such outfits in the form of Alternate Infrastructure Funds, Uday Kotak, Managing Director and CEO, Kotak Mahindra Bank, and President, Confederation of Indian Industry, said. The veteran banker also suggested the setting up of a development financial institution for infrastructure, while speaking at BusinessLine’s Countdown to Budget 2021 event on Wednesday.

“One of the suggestions we have made from the CII is rather than thinking about just one single bad bank, where you have a big challenge of clearing price, allow floatation of multiple bad banks in the form of Alternate Infrastructure Funds registered under SEBI. They should also be allowed to buy, in addition to securities, loans from banks and NBFCs balance-sheets and to be considered as part of the permitted activity for AIFs,” Kotak said while delivering the keynote address at the HDFC Bank powered conference themed ‘Unleashing the animal spirit in a pandemic hit economy’ .

‘Needed, a DFI’

He also suggested setting up of a development financial institutions.“The reason is if you look at NABARD, which has been a success in rural and agriculture, or SIDBI in the area of MSMEs, the time has come for a massive infra push for India’s growth transformation and through that creating a reverse demand for various other products and services. A DFI, with a creative way of funding that institution with long-term money, is something that may be appropriate,” he said.

Budget 2021-22, which is being presented amidst the Covid-19 pandemic, is not just about arithmetic but also about being a policy document that spells out a new future for the country, Kotak said.

“We are in the best of times, the worst of times…the pandemic is a once-in-a-hundred year event. For all the challenges it has created to lives and livelihood, it is also the best time for us to grasp the opportunity of a transforming world economy, Indian economy, and society,” Kotak said.

Five focus areas

He underlined five key focus areas that the Budget should focus on. These include infrastructure, healthcare, education, sustainability, and defence. Additionally, there is a need for a continued push in three areas of private investments, jobs and digitisation.

Finance Minister Nirmala Sitharaman, who will present the Budget on February 1, has promised a “never before” like Union Budget as the government looks to boost growth amidst the pandemic.

“I genuinely hope this Budget will live up to the expectation that it is a Budget like never before,” Kotak said.

He also called for a gradual normalisation of the fiscal deficit over a three-year period and recommended a stable tax and interest rate regime.

 

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