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Gyan Sangam 2016 ends; focus on bank consolidation, NPAs

The two-day Gyan Sangam summit ended today without any policy announcement but with the government reiterating its commitment to taking more steps to boost the sector.

Moneycontrol Bureau

The two-day Gyan Sangam summit, a forum where the highest officials from public sector banks, the government and the Reserve Bank of India, meet to discuss issues facing the sector, ended today without any policy announcement but with the government reiterating its commitment to taking more steps to boost the sector.

“Several issues were considered at the Gyan Sangam,” Finance Minister Arun Jaitley said at a press conference following the culmination of the event. “Among these were discussions on bank consolidation, non-performing assets, carrying out changes to recovery laws and giving out employee stock options.”

The FM, however, said that the government would consider all suggestions that banks had made and added that while no decision on any proposals has been taken, the government was actively looking into forming a bank consolidation committee and tweak laws such as the SARFAESI and with respect to the debt recovery tribunal.

“The debt recovery tribunal will likely be streamlined to shift its processes online and an effort will be taken to compress the period taken to decide on a case in DRT,” Minister of State for Finance Jayant Sinha said.

However, analysts were not impressed saying that in the absence of any concrete announcement, any qualitative commentary will unlikely to offer cues into what definite steps the government will take to fight the ongoing NPA crisis in the banking system.

Besides, at the Gyan Sangam, a lot of discussion took place between the bankers that focused on using digital technologies to change the revolutionize the way banking is done in the country, Abizer Diwanji of EY India, who was one of the attendees at the summit, told CNBC-TV18.

“There was nothing in the FM’s conference that indicated any material decision was taken that will change the plight of the industry,” banking expert Hemindra Hazari told CNBC-TV18.

He further said that even if the government presses ahead with consolidation, it may not be a great move.

“A large bank acquiring a small bank will make the former weaker,” he said.

Prakash Jariwala agreed, saying that he does not see a tremendous recovery in the banking sector in the next fiscal.

Bank stocks have rallied in the past few days — following a savage fall over the past six months or so — with some analysts saying that the banking cycle has bottomed out in the country and that things could look up.

But Jariwala said that much of the rally had played out.

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