The task of npa management is a top-priority item for the government. It is reflected in the steps being taken by the finance ministry. In the recent move, it is said that two public sector banks will be privatized along with Life Insurance Corporation of India and a common insurance company.
These two banks will be different from the fleet of banks that consolidated in the recent past. Hiving off the NPA burden and reducing the fiscal deficit are the main reasons for this move. NPA experts and nclt lawyers Mumbai have welcomed the move.
This decision is not for making the issues of consolidation further complex. There are several integration points there. The task of consolidation will have to be carried out in multiple phases.
Efforts have been started by the government since 2019 when the merger of 10 public sectors into 4 bigger ones. Thus, the nationwide count of public sector banks will come down to 12.
Movement of staff is also on the agenda
There are several facets of the action plan.
One step is to include shifting some people to various lenders and engaging them for customers. The purpose of all banks is to clean the balance sheet as much as possible to get better valuation. It is possible when the NPA situation improves. Employee movement is an important npa management strategy.
It will be a joint effort of the finance ministry and the Neeti Ayog. Both will brainstorm and find out the best candidates for privatization. The RBI is also searching for different options under the legal framework. Though some finance experts rebuke some of the steps or ideas of the recent consolidation/privatization move, it is not possible to assess it today.
After a few years, we will be able to evaluate whether they made a revolutionary change in the financial condition or failed.
The government will safeguard the interest of banks
The finance minister has assured that in spite of the hard steps taken by the government to control NPA, the utmost effort will be taken to protect the interests of the people working in these organizations. While negotiating with the bidders, it will be made clear that not a single employee should face adverse effects.
It is essential to reduce the burden of NPA. Hence, the effort taken by the government should be welcomed. It is important from the perspective of the financial health of the country.