Heads of public sector banks have decided to iron out issues on consortium lending among themselves, interim finance minister Piyush Goyal said on Tuesday .
“All bankers will take upon themselves certain covenants to work as a team, and not in silos” he said while addressing a press conference in New Delhi. Goyal, who met PSU bank chiefs in Mumbai, said it was agreed that “decisions taken by 66% of the bankers’ in a consortium will now be followed by all the members of a consortium.”
SBI chairman Rajnish Kumar, also present at the press conference, said PSU banks need to devise stronger risk management mechanisms, and support each other to sustain the signs of revival in the economy.
Kumar said that ground rules in consortium lending are missing, and banks need to support ‘good accounts’ and small and medium enterprises.
The State Bank of India will also support smaller banks which might not have robust risk management facilities, he added.
Goyal said the government is open to considering the RBI’s demands for “additional powers” to regulate public sector lenders.
In March, Reserve Bank of India chief Urijit Patel had said that the central bank had “very limited authority” over state-run banks, calling for reforms to give the central bank more powers to police such lenders in the wake of the over $2 billion PNB fraud.