Finance Minister Arun Jaitley stated at the Gyan Sangam that no defaulter will be allowed to go scot free in the fight against stressed assets. Speaking to Bloomberg TV India, Dena Bank CMD Ashwani Kumar said a committee will be set up to look into PSU banks consolidation.

PSU banks have often been prodded to go for mergers. It has not worked because of tough resistance from trade unions. There seems to be a move to again bring bankers together. Do you think it will be possible this time around?

Regarding consolidation, I think the Finance Minister has very clearly told his views to banks. A group was formed to discuss the merger issues. So there has been a suggestion that a committee should be formed, which should see how to put the mergers on the road. Maybe we have six-eight banks around which the consolidation can take place. The group has recommended that the committee should look into it and advise it on how to go about it.

What are the contours of the consolidation likely to be? Is it going to be on a geographical basis? What is the sense you are getting from the early conversation?

A committee will look into various nuances of consolidation. A number of areas will be taken into account — geographical areas, cultural issues, IT platforms, strength of the balance sheets, reach of the banks and their expertise. So there are host of issues the banks will have to address and the committee has to look into that before we come to a conclusion on which two banks can unite to form a stronger entity.

The FM had mentioned IDBI Bank’s privatisation in the Budget. But we have already heard of the unions going on a token strike to protest against the privatisation. How difficult is it going to be to work around the unions at a time when the PSUs banking sector is stressed?

Everybody has to realise where the industry and times have moved. Things have changed, the world has changed and it is changing on a daily basis. So it is for all the stakeholders — whether it is unions or the shareholders — to understand the issues and then come to a conclusion on what is better for the institution. Ultimately, we work for the institution.

We work for the public. So whatever is good for the public and institution, we have to work on those lines.

One of the big issues discussed at Gyan Sangam was how to deal with the wilful defaulters and people who have reneged on their payments. What was the general consensus? Are we going to see more of this from bankers?

There was a group which was discussing recovery and asset quality management. We have decided that we will very strong on recovery of bank dues. And in case of wilful defaulters, the recovery efforts would be even stronger.

And we have recommended and suggested some steps, which the Finance Minister has agreed to look into. We have suggested some improvements in the DRT Act, some improvement in SARFAESI Act and the enactment of Bankruptcy Code.

With these improvements, I think, the recovery process will hasten up and we will be able to catch defaulters in time, recover our money and be able to attach their assets if there is diversion of funds.

Many PSU banks including Dena Bank recorded a hefty rise in NPAs and posted a loss in Q3. Is the worst over or do you see fresh slippages?

I think Q3 and Q4 will be the most painful quarters.

Going forward, as there are clear signs of the economy improving, regulations being put into place and various policy measures announced by the government, things should start improving. Maybe Q4 will be the worst quarter and things will start improving from there.

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