Pune: Finance Minister Arun Jaitley on Saturday gave a strong indication of some bold reforms that the government is planning for the public sector banks. Speaking on the sidelines of a two-day banking retreat here, Mr Jaitley said banks need to be given leeway to deal with "commercial issues with a commercial mindset". The bankers know where the shoe pinches, he said.
Mr Jaitley also stressed on the need for attracting best talent into the public sector banks. Bankers, sources said, have sought a revamp of recruitment system in banks and better compensation structure to attract better talent.
The economy is at a transformational stage and there is a need for the banking system to finance infrastructure development in the country, Mr Jaitley said.
The Finance Minister also stressed on the need to bring down the bad assets in the banking system. Experts said that the high level of non-performing assets (NPAs) in the banking system could hinder the ability of banks to lend and it could be a drag on economic recovery process. Mr Jaitley said that non-performing loans in some cases was "unacceptable".
Meanwhile, Minister of State for Finance Jayant Sinha said he expected bold structural reforms in banking sector. He also hoped that credit demand in the banking sector will increase in next few months.
The government banks recorded the highest level of stressed loans at 12.9 per cent of their total advances in September last year, while the same ratio for private sector banks was at 4.4 per cent, according to RBI data. India's top bankers have gathered in Pune to discuss long-pending reforms vital to improving the health of ailing public sector banks in Asia's third-largest economy.
(With agency inputs)