Gross NPAs have come down to Rs 7.9 lakh crore, says Nirmala Sitharaman

New Delhi, Aug 30: Finance Minister Nirmala Sitharaman on Friday said the profitability of public sector banks has improved and total gross non-performing assets have come down to Rs 7.9 lakh crore at end-March 2019 from Rs 8.65 lakh crore at end-December 2018.

While addressing Sitharaman said,''We need to lay a strong foundation for the financial sector, but also make sure that we give banks a good governance model.''

The measures to be announced today will aim to increase credit in the market, Sitharaman has said, hinting that the measures to be announced will be aimed at increasing lending.

The government is also focussed on giving banks a good governance model, Sitharaman has said. The last statement is a hint at the bad loans crisis that the banking sector faces.

Sitharaman said,''Gross non-performing assets stand at 7.9% in finanicial year 2019 compared to 8.65% the previous year. The highest provision coverage ratio has occurred in seven years in the financial year 2019 at 75.3%. Specialised agencies have been set up to monitor loans over Rs 250 crore.''

The finance minister also said that the employees were not retrenched after the merger of Bank of Baroda, Vijaya Bank and Dena Bank.

Announcing about the merger to take place of the banks, Sitharaman said,''Punjab National Bank, Oriental Bank of Commerce and United Bank will be merged. The merged entity will become the country's second largest public sector bank.

''The merged bank will business of Rs 17.95 lakh crore. It will have the second largest branch network in India, with 11,437 branches," Sitharaman adds. "The CASA ratio of the amalgamated bank will be 40.52%. We are following RBI guidelines and Basel norms."

The finance minister says Indian Bank will be merged with Allahabad Bank.

Union Bank of India will be merged with Andhra Bank and Corporation Bank to become the fifth largest public sector bank in terms of business, says finance minister. "Canara Bank will be merged with Syndicate Bank," she adds. "It will become the fourth largest public sector bank with business of Rs 15.2 lakh crore."

With these mergers, there will be 12 public sector banks in the country against 27 in 2017, the finance minister points out.

Her press conference was held shortly before the latest Gross Domestic Product (GDP) growth numbers are released.

Last week, Sitharaman had announced a slew of measures to boost the economy, less than two months after presenting the Union Budget.

The Reserve Bank of India had also announced last week that it will give the central government Rs 1.76 lakh crore of its dividend and surplus reserves.