Expert group on consolidation of banks soon: Jaitley

Gurgaon: Government will soon set up an expert group to look into consolidation of public sector banks as the country needs stronger rather than a large number of banks, Finance Minister Arun Jaitley said here on Saturday.

He also said the government is considering ESOPs for PSU bank officials besides strengthening the SARFAESI Act and Debt Recovery Tribunals to deal with the problems of stressed assets that are estimated at around Rs 8 lakh crore.

Addressing a press conference at the conclusion of the second edition of Gyan Sangam, Jaitley said that consolidation in the banking sector was discussed at the meeting and bankers themselves have suggested that an expert group should be set up soon to look into the issue.

"We will consider that suggestion," the minister said adding that the country needs stronger banks rather than large number of lenders.

There could be niche banks and banks which could survive independently and sustain themselves well, he said, observing that the Gyan Sangam strongly supported the idea of consolidation in the banking sector.

The other idea which was suggested at the meeting was to reward the public sector bank employees with Employee Stock Ownership Plan (ESOP), he said.

"Government is considering (the proposal of ESOP for bank employees). It is in very advanced stage... It has been long standing demand, and is (under) an active consideration," Jaitley said.

With regard to the rising Non-Performing Assets or bad loans, Jaitley said that besides strengthening the institutional mechanism, the government has been taking sector specific decisions to deal with the problems in segments like power, highways, sugar and steel.