Strengthening public sector banks top priority, merger can happen later: FM Jaitley

Hong Kong: Stressing on an urgent need to strengthen public sector banks, Finance Minister Arun Jaitley on Monday said the government's top priority is to bring down levels of their bad loans, and steps like issuance of fresh capital and merger of weaker banks would take place after strengthening them.

Talking about the steps being taken to strengthen the banks, Jaitley said, "Rs 70,000 crore is not the only money. Rs 1.10 lakh crore is coming through issuance of additional capital.

"The idea is to first strengthen the banks and then issue the capital. I would not issue the capital at the present level of NPAs. I have indicated a 3-4 year road map. In the next three years, we would have complied with Basel III norms. Therefore, Rs 1.80 lakh crore is to be invested, including Rs 70,000 crore from the Budget.

"My first tranche is to strengthen the banks. First, we need to bring down the NPAs, only then banks will issue the capital," he said here at a press conference on the last day of his four-day visit to Singapore and Hong Kong.

Asked whether he would look at merger of some banks, Jaitley said, "That option after strengthening the banks is open."