In a major banking sector reform, the government on Tuesday gave public sector banks the freedom to acquire other state-owned and private banks, finance companies and other businesses without its permission.
The finance ministry also came out with a list of areas where banks will have freedom. These include:
- Entering into new lines of business;
- Foraying in overseas markets.
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As part of efforts to offer level playing field to PSU banks to compete with private and foreign banks by hiring the best talent, state-owned banks also got managerial autonomy to appoint professionals at a higher salaries and as many general managers as they wish.
However, government has put four pre-conditions:
- A track record of three years consecutive profit:
- Capital adequacy ratio of over 9 per cent;
- Net non-performing assets of less than 9.0 per cent; and
- Minimum owned funds of Rs 100 crore (Rs 1 billion) -- for banks to get the managerial and functional autonomy.
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