Consolidation to make banks vibrant, competitive: Jayant Sinha

Post governance and management changes via Indradhanush package, and stress testing through the asset quality review (AQR), the government is now in the third phase of banking reforms— consolidation, said Jayant Sinha, MoS, Finance. "The goal through this effort is to ensure that our banks are vibrant, competitive and can compete with the world's best," Sinha tells CNBC-TV18.Below if the transcript between CNBC-TV18’s Sapna Singh and Jayant Sinha. Q: What is the road ahead for PSU consolidation?A: This is the third phase of the banking reforms that we have launched. The first phase was the governance and management changes that we made as part of the Indradhanush package and the second phase has been the asset quality review (AQR) and the stress testing that we have now largely completed.The third phase is in fact the consolidation phase and the goal through this effort is to ensure that our banks are vibrant, they are competitive and they can compete with the world\\'s best. Now the strategies that the banks are going to develop to be able to do that is something that has to happen bottoms up through the strategy setting work that the banks do and through what they do in terms of their board deliberations and the decisions they make about their competitiveness. So, we will have to see how this emerges bottoms up from the deliberations that each bank is going to have to undergo.Q: Also the Banks Boards Bureau recently spoke about an alternate mechanism for resolution of the bad loans, can you throw some light on what this alternate resolution that they are talking about?A: What we want to be able to do is that we want to make it possible to have a streamlined process by which NPAs can be considered across all the different banks because in case where you have large borrowers you often have 5-20 banks that are lending to these borrowers and who have exposure to these borrowers. So, we want to be able to have a streamlined process where the recovery decisions are made and we have to separate out the integrity of the process from the actual commercial decision making as well and so we are working on ways to be able to do that.