'Bank consolidation to deal with ailing PSBs'b

'Bank consolidation to deal with ailing PSBs'b

 RBI Deputy Governor Viral V Acharya suggested consolidation of banks as a creative way of dealing with ailing public sector banks instead of recapitalising them with government funding all the time.

“As many have pointed out, it is not clear that we need so many public sector banks. The system will be better off if they are consolidated into fewer but healthier banks. After all, we do have cooperative banks and microfinance institutions to provide community-level banking,” Acharya said while speaking at the Ficci FLO Mumbai Chapter.

“Some banks can be merged, as a quid pro quo for timely government capital injection into the combined entity. It would offer the opportunity to rejig management responsibility away from those who have under-performed or dragged their feet the most. Synergies in lending activity and branch locations could be identified to economise on intermediation costs, allowing sales of real estate where branches are redundant,” Acharya said, adding that voluntary retirement schemes (VRS) can be offered to manage headcount and usher in a younger, digitally-savvy talent pool into these banks.

Acharya, who was recently appointed as the deputy governor, also did mention that the central bank is looking at employing more women in its workforce.

“Do apply to the Reserve Bank of India where we are looking to rebalance our gender distribution of personnel that has gone a bit askew. We are ready to have in our workforce dedicated women,” Acharya said.

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