Pune: Finance Minister Arun Jaitley on Saturday promised more autonomy for state-run banks to run business with a “commercial mindset”. He also termed the level of bad assets in the system as “unacceptable”.
The Finance Minister said there is a need to bring about changes in many areas in state-run banks, including giving “far greater autonomy” and allowing them to hire the best talent.
“There are unacceptable levels of NPAs (non-performing assets) in some cases and the banks have to be given a sufficient amount of leeway, to deal with commercial issues with a commercial mindset,” Jaitley told reporters on the sidelines of a two-day bankers’ retreat in Pune.
The two-day banking conclave, which started on Friday, is being held at a crucial time when India is moving towards accelerating the pace of growth, he said.
The government, which a majority owner in 27 public sector banks, that control over 70 % of the system, wants to hear the problems plaguing the sector from the bankers and external experts as “they know the best where the shoe pinches”, he said.
Â “I am certain this conference is going to pave a way for a new roadmap,” he added.
The meeting comes at a time when the gross NPA in the system has touched 4.5 % in September 2014, and days after strong commentary from RBI about state-run lenders lagging behind their private sector rivals on asset quality management.
The Finance Minister said there was a need for the banking sector to fund infrastructure and manufacturing sectors to support the ambitions of higher growth.
“There is a need now for the banking system in India in a big way to finance infrastructure, manufacturing and infuse liquidity. There is also a need to conceive several reforms in the banking sector,” he added.