Bankers hope for clear roadmap on mergers, NBFC, infra issues

Bankers and experts are hoping for a clear roadmap and statement of intent from the government in the Union Budget 2019-20 on issues ranging from mergers and consolidation, the NBFC crisis, problems in the Insolvency and Bankruptcy Code, and bottlenecks in infrastructure projects.

At a panel discussion as part of the the BusinessLine Count Down to Union Budget 2019, moderated by Radhika Merwin, Senior Deputy Editor, BusinessLine , they also spoke about introspection on issues such as governance and the impact of the real economy on the banking sector.

B Rajkumar, Deputy Chief Executive, Indian Banks’ Association, raised the issue of differentiated banking, and said that the government can look at giving different banks the task to serve the requirements of different sectors of the economy.

“The government can have differentiated banks – one for the weaker section, one for the MSME sector, and another 2-3 for commercial business. That is the only way,” said Rajkumar, even as he emphasised that his views are personal. Shyam Srinivasan, Managing Director and CEO, Federal Bank, noted that the intent of the government in the Budget speech will be important.

“We are only guessing what the Finance Minister reads, but more important (than the content) will be the voice, how she reads it and the intent. If the intent is well received, it will do much more than the words she says,” he said.

Public sector

When asked whether investors will be willing to put in money in public sector banks (PSBs), Srinivasan indicated there has to be clarity from the government on plans for dilution of ownership.

“If the Budget makes a statement of intent that over the next 3-5 years, and this is the decisive roadmap, then money will certainly come in,” he said.

He added that a roadmap will bring about skill upgradation and capability enhancement in PSBs.

KVS Manian, President, Kotak Mahindra Bank, also expressed hope of a clear roadmap on how the government intends to deal with the banking sector and the commercial and governance issues, and said there could be some reasonably big-bang — but focussed — initiatives in the Budget.

“It will help the sector in general,” he said, adding that some of the financial infrastructure issues, the IBC issues should also be reviewed.

“Why can’t some large financial infrastructure initiatives be taken? It will also solve the housing sector’s issues,” he said.

‘Real movement’

Referring to the trend over the last few years, which indicates the government’s intent to have 5-6 large banks in the public sector space, Rahul Prithiani, Director, CRISIL Research, said a lot of initiatives can also be taken by the government outside the Budget.

“I would like to see some real movement on the real economy issues, the structural bottlenecks and on moving the manufacturing space. Similarly, measures can be taken to revive the SME and consumer sector. On the infrastructure side, a lot more needs to be done by the government. Some of the issues can be sorted even outside the Budget,” he said.

NBFC crisis

Highlighting issues in the NBFC sector, Umesh Revankar, Managing Director and CEO, Shriram Transport Finance Company, said they need to be supported by the government. He also recommended a refinancing window for NBFCs and reworking the role of the Micro Units Development and Refinance Agency (MUDRA).

“MUDRA was to be a refinancing agency for NBFCs (also), but hardly anything has been refinanced,” he noted. He added that the government should also consider increasing its spending in infrastructure over the next four years.

COMMENT NOW