Gyan Sangam's second edition is under way. This two day Sangam is being held at Gurgaon with an aim to consolidate public sector banks (PSBs). The second edition of Gayan Sangam is also going to review decisions taken during the first edition. The financial performance of PSBs and other financial institutions is of course on the agenda.
The Gyan Sangam is also going to allow heads of financial institutions to debate on two focus areas of the present government which are: financial inclusion and the direct benefit transfer scheme. This edition of Gyan Sangam will review Pradhan Mantri Jan Dhan Yojana in detail.
Atal Pension Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) will also be reviewed in detail. As per the official figures as on 20th January as many as 20.38 crore bank accounts have been opened under PMJDY and these accounts have deposits over Rs. 30,000 crore.
The heads of public sector financial institutions are present and they will be joined in by Finance Minister Arun Jaitley, Minister of State for Finance Jayant Sinha, RBI Governor Raghuram Rajan, Financial Services Secretary Anjuly Chib Duggal and other senior finance ministry officials.
The discussion is mainly to focus on mergers and acquisitions in the banking sector. The Gyan Sangam is being held at the time when banking sector is coping with rising non-performing assets (NPAs). Unfortunately NPAs are expected to rise further during the times to come.
Here are some startling figures to justify the point:
Gross NPAs of PSBs stand at Rs. 3.60 lakh crore as on 31st December 2015. This is a huge increase when compared with the figures as on 31st March 2015 which was Rs. 2.67 lakh crore.
The idea becomes clearer when one compares these figures with the figures of NPAs of private sector banks. Gross NPAs for private banks stood at Rs. 38,396 crore as on 31st December 2015 which also shows increase when compared with the figures as on 31st March 2015. The figure of NPAs for private sector banks then was Rs. 31,576 crore.
It is very natural that such huge amounts of NPAs have brought down the profitability of PSBs drastically. Here is how profit figures stand for few PSBs:
Many PSBs including Bank of Baroda, Bank of India, and IDBI Bank have reported their highest ever quarterly loss totalling over Rs. 12,000 crore. The figures are just for the third quarter of financial year 2015-16. On the other hand other PSBs like SBI and PNB have reported sharp decline in their profits.
The first Gyan Sangam:
The first Gyan Sangam was held last year in the city of Pune where Prime Minister Narendra Modi had addressed heads of PSBs and insurers and financial regulators. PM had promised banks of no interference from any government functionary in their commercial decisions.
During the first Gyan Sangam focused discussions were held in groups on six topics. The result was specific decisions were taken which resulted in optimising capital digitising processes, strengthening risk management, improving managerial performance and financial inclusion.