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Have enabled state banks to make their own destinies: Sinha

In an interview with CNBC-TV18, Jayant Sinha talked about the initiatives announced today, including key steps such as announcing the date for the launch of a Bank Board Bureau, detailing its recapitalization plan as well as announcing changes to the way the government’s evaluates banks’ performances.

Have enabled state banks to make their own destinies: Sinha

Soon after announcing a comprehensive seven-step programme to reinvigorate the country’s struggling public sector banks (PSBs), Minister of State for Finance Jayant Sinha said the government is trying to free them from the shackles of statist controls to enable them to “chart their own destinies” as commercial entities.

In an exclusive interview with CNBC-TV18, Sinha talked about the initiatives announced today, including key steps such as announcing the date for the launch of a Bank Board Bureau, detailing its recapitalization plan as well as announcing changes to the way the government’s evaluates banks’ performances.

“We have a adopted a very bottoms-up approach [with respect to trying to change how processes work within state banks],” he said”, adding that after giving them the autonomy “that never existed before”, the government is recalibrating its role to become merely an enabler.

Sinha dismissed criticism from observers that the steps announced today, while helpful over the medium term, will not do much to immediately tame the NPA crisis banks face today, saying steps such as appointment of the Bank Board were “big bang” and would help banks.

He also talked about the government’s divestment programme, saying banks will have to make their own decisions with respect to selling stake in order to raise capital to meet their requirements.

But he stayed away from saying if or when the government could actually start considering reducing its stake in banks below 51 percent.

Interview transcript to follow.

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