Any merger initiative has to come from board of banks: Jayant Sinha

New Delhi: The government Tuesday set the record straight on merger of public sector banks, saying any initiative has to come from the board of the banks concerned, and its role is that of a facilitator.

"As far as merger of banks is concerned, any initiative with respect to merger of public sector banks has to come from boards of the banks concerned, the extant legal framework, keeping in view synergies and benefits of merger and their commercial judgement," Minister of State for Finance Jayant Sinha said in a written reply to the Rajya Sabha.

The role of the government or the Reserve Bank of India in the merger of banks would be that of a facilitator, he clarified, adding that "no such initiative has been received in this regard from any bank".

The guiding principle for consolidation process of banking in India has so far been from the Narasimham committee, according to which the move towards the restructured organisation of the banking system should be market-driven based on profitability considerations and brought about through a process of mergers and amalgamation, he said.

In another reply, Sinha said public sector banks have written off Rs 1,14,181 crore of debt, including compromise settlements, during 2012-13, 2013-14 and 2014-15.

Data reporting system of RBI does not collate segment-wise information on written-off accounts.

Loans, the minister said, are written off after appropriate provisions have been made to take advantage of tax benefit and capital optimisation.

In respect of technical ones, RBI has permitted write-off at the head office level while recovery efforts continue at the branch level.

In some cases where recovery falls short of the total outstanding in the account, the shortfall is actually written off either through compromise settlements or sale of financial assets to asset reconstruction companies, he added.

Replying to another query, he said India has proposed two projects -- development of a satellite port of JNPT (Maharashtra) and a new major port at Colachel (Tamil Nadu) -- so far to the Asian Infrastructure Investment Bank (AIIB).