Union Minister of Finance & Corporate Affairs Smt. Nirmala SItharaman's Presentation on amalgamation of National Banks

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....nion Minister of Finance & Corporate Affairs Smt. Nirmala SItharaman's Presentation on amalgamation of National Banks <br>News and Press Release<br>Dated:- 30-8-2019<br><BR>============= Document 1 Measures to Achieve Higher Economic Growth Progress since Announcements on 23.8.2019 सत्यमेव जयते Department of Financial Services Ministry of Finance Government of India Quick Follow-up on Measures Announced on 23.8.19 Announcements Banks to launch Repo rate 1 linked loan products Rs. Customer Ease: Time-bound 2 Do return of loan documents Customer Ease: Online 3 + tracking of loan applications Transparent One Time 4 Settlement (OTS) Policy Support to NBFCs/HFCS: 5 6 Partial Credit Guarantee Co-origination of loans by PSBs jointly with NBFCs 8 Actions initiated 8 PSBs have launched repo-linked home/vehicle/mortgage/cash-credit loans Instructions issued. To be enforced through CBS. Regional Managers responsible. Implementation initiated with Retail/MSME on Loan Management Systems Instructions issued Sanction begun with ~3,300 crore and ~Rs. 30,000 crore more in pipeline Bank-NBFCs tie-ups w....

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....ith 4 NBFCs already in place. More in pipeline. Rapid Growth needs Robust Credit Capacity Indian Economy (GDP) Strong banks imperative for $5 trillion economy $ 2.6 trillion 2017 $ 5 trillion 2024 Credit to the Economy ~72% of GDP $ 1.9 trillion Commensurate growth Strong Foundation Laid through Financial Sector Reforms An Ongoing Endeavour सत्यमेव जयते Department of Financial Services Ministry of Finance Government of India. प्रक्रियाओं में मूलभूत परिवर्तन BANKING THEN 1. Phone Banking 2. Layered entry operations 3. Auditors not independently regulated 4. Restructuring of stressed assets often without actual resolution 5. Stress restructured and not recognized as NPA ) BANKING NOW No interference in commercial decisions 3.38 lakh "shell" companies struck off NFRA set up as independent regulator of auditors Resolution through IBC: Connected party debarred Restructuring schemes withdrawn ☑ प्रक्रà¤....

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....¿à¤¯à¤¾à¤“ं में मूलभूत परिवर्तन BANKING THEN 6. Releases often without ensuring loan conditions/ project clearances BANKING NOW Releases only after ensuring loan conditions and clearances 7. Consortiums with 30-31 members Consortiums limited to 7 to 9 8. Inadequate techno-economic valuation capacity 9. Technology / analytics not fully leveraged for appraisal 10. Inadequate Early Warning Signal system & no specialised monitoring 園 Techno-economic valuation cells created in banks Technology / analytics used for robust due diligence EWS in place; Specialised agencies monitor loans > 250 crore प्रक्रियाओं में मूलभूत परिवर्तन BANKING THEN BANKING NOW 11. Cash flows not ring-fenced Cash flows ring-fenced % 12. Banks overexposed to corporate loans 13. Sanction and monitoring not strictly separated 14. Banks often on verge of default due to poorer quality capital 15. Inadequate slippage prevention mec....

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....hanism Business plans implemented for balanced asset mix > Sanctioning and monitoring of big loans strictly separated HV Rs. Quality of Tier-l capital enhanced Stressed asset verticals created प्रक्रियाओं में मूलभूत परिवर्तन BANKING THEN 16. Fleeing defaulters retained control of assets 17. Inadequate digital lending interface 18. Foreign branches retained despite losses SEIZED BANKING NOW Fugitive Economic Offenders Act to confiscate assets PSBloansin59minutes.com launched Foreign branches rationalised 19. Ad hoc loan-pricing 20. Loan Management System (LMS) in only a few PSBs 51 Adherence to risk-based pricing Retail & MSME LMS implemented प्रक्रियाओं में BANKING THEN 21. SWIFT messages not always linked to CBS 22. Slow, multi-level decision-making for loan sanction 23. No online bill discounting platform 24. Selection of top management not done independently 25. MD selection from within banks of same category 26. MD al....

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....so being Chairman weakened Board oversight मूलभूत परिवर्तन BANKING NOW SWIFT SWIFT messages linked to CBS IT-based centralised processing centres and verticals started MSME bills discounted on TReDS Selection at arm's length through Banks Board Bureau MD selection from market for large PSBs and wider pool for other PSBS Non-executive Chairman introduced Gains Visible from PSB Reforms सत्यमेव जयते Department of Financial Services Ministry of Finance Government of India Gains visible from PSB Reforms Record recovery In crore Gross NPAs 8.96 1,21,076 8.76 8.69 8.65 77,563 61,930 In lakh crore Asset quality better NPAS 1.06 lakh cr. 7.90 FY17 FY18 FY19 Mar-18 June-18 Sept-18 Dec-18 Mar-19 Provision Coverage Ratio Highest in 62.7 57.9 % 75.3 % 7 years % Enhanced profitability 6 PSBs 14 PSBs in profit (as against two in FY18) Q4FY19 Mar-17 Mar-18 Mar-19 12 PSBs 4 PSBs Q1FY20 Gains Visible from Amalgamation of BoB + Vijaya + Dena Bank POWER OF सत्यमेव जà....

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....¯à¤¤à¥‡ Department of Financial Services Ministry of Finance Government of India BoB + Vijaya Bank + Dena Bank Potential unlocked B बैंक ऑफ़ बड़ौदा POWER Bank of Baroda www.be 4444 OF Robust CASA growth Wide-ranging benefits ✓ Wider offerings, enhanced customisation 2,69,000 ✓ Operations rationalised ✓ Verticalisation initiated ✔ No retrenchments: • Best of employee benefits Jun'18 6.9% 2,87,00 0 T • Admin staff redeployed for business BoB + Vijaya + Dena Strong retail loan growth 93,000 #16.6% 20.5% Jun'19 Profitability enhanced 1,12,00 0 BOB + Vijaya + Dena Q4FY1 Amounts in crore Rs. + 7,823 cr. Amounts in crore Rs. Poised for rapid growth Set for market raising High profit trajectory Strong valuation gain projected 710 37,000 35,000 Q1FY2 0 Market Cap (In crore Rs.) 51,000 Based on analysts' (38) recommendations - Bloomberg for SCBS Jun'18 Jun'19 BoB + Vijaya + Dena (-) 7,113 Apr Aug Aug '19 '19 '20 Building NextGen Banks सत्यमेव जयते Department of Fin....

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....ancial Services Ministry of Finance Government of India Unlocking potential through Consolidation Big banks with enhanced capacity to increase credit Banks with strong national presence and global reach Operational efficiency gains to reduce cost of lending Banks with scale for building a $ 5 trillion economy Enhanced risk appetite Thrust on NextGen technology for banking Wider offerings with enhanced customisation Better ability to raise resources from markets ☑ Snapshot of Consolidations सत्यमेव जयते Department of Financial Services Ministry of Finance Government of India PNB + Oriental Bank of Commerce + United Bank 2nd largest PSB with business of 17.95 lakh crore (~1.5 times PNB) 2nd largest branch network in India, with 11,437 branches Scale and synergy benefits through: punjab national bank | ओरियन्टल बैंक ऑफ़ कॉमर्स Oriental Bank of Commerce युनाइटेड बैं UNITED ऑफ़ इंडिय BANK OF Hig....

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....h CASA and lending capacity combined in consolidated bank Large cost reduction potential due to network overlaps Cost saving and income opportunities for JVs and subsidiaries Same CBS platform (Finacle) in all three banks to enable quick realisation of gains PNB + Oriental Bank of Commerce + United Bank punjab national bank ओ. बी. सी. • युनाइट ऑफ़ इंडिया बैंक ऑफ BANK UNITED B OF INDIA PNB OBC United Bank of India Total business (in crore *) 11,82,224 4,04,194 2,08,106 Amalgamated bank 17,94,526 Gross advances (in crore) 5,06,194 1,71,549 73,123 7,50,867 Deposits (in crore *) 6,76,030 2,32,645 1,34,983 10,43,659 CASA ratio 42.16% 29.40% 51.45% 40.52% Domestic branches 6,992 2,390 2,055 11,437 PCR 61.72% 56.53% 51.17% 59.59% CET-I ratio 6.21% 9.86% 10.14% 7.46% CRAR ratio 9.73% 12.73% 13.00% 10.77% Net NPA ratio 6.55% 5.93% 8.67% 6.61% Employees 65,116 21,729 13,804 1,00,649 March 2019 financials Canara Bank + Syndicate Bank 4th largest PSB with business of 15.20 lakh crore (~1.....

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....5 times Canara Bank) 3rd largest branch network in India, with 10,342 branches Scale and synergy benefits through: केनरा बैंक Canara Bank सिंडिकेटबैंक Syndicate Bank Faithful Friendly भारत सरकार का उपक्रम A Govt. of India Undertaking Large cost reduction potential due to network overlaps Similar culture to enable smooth consolidation Cost saving and income opportunities for JVs and subsidiaries Same CBS platform (iFlex) in both banks to enable quick realisation of gains Canara Bank Syndicate Bank Total business (in crore *) 10,43,249 4,77,046 Canara Bank + Syndicate Bank केनरा बैंक Canara Bank Faithful. Friendly Amalgamated bank 15,20,295 सिंडिकेटबैंक Syndicate Bank ॐ भारत सरकार का उपक्रम A Govt. of India Undertaking Gross advances (in crore) 4,44,....

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....216 2,17,149 6,61,365 Deposits (in crore *) 5,99,033 2,59,897 8,58,930 CASA ratio 29.18% 32.58% 30.21% Domestic branches 6,310 4,032 10,342 PCR 41.48% 48.83% 44.32% CET-I ratio 8.31% 9.31% 8.62% CRAR ratio 11.90% 14.23% 12.63% Net NPA ratio 5.37% 6.16% 5.62% Employees 58,350 31,535 89,885 March 2019 financials Union Bank + Andhra Bank + Corporation Bank 5th largest PSB with business of 14.59 lakh crore (~2 times Union Bank of India) 4th largest branch network in India, with 9,609 branches Scale and synergy benefits through: S ORATION BANK BIRT || vidats: effedał udą |♬ Business to become twice to 4½ times existing bank business Large cost reduction potential due to network overlaps Cost saving and income opportunities for JVs and subsidiaries Same CBS platform (Finacle) in all three banks to enable quick realisation of gains BANK कार्पोरेश सर्वे जनाः भवंतु Union Bank + Andhra Bank + Corporation Bank O Amalgamated bank Union Bank Andhra Bank Corporation Bank Total business (in crore) 7,41,307 ....

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.... 3,98,511 3,19,616 14,59,434 Gross advances (in crore *) 3,25,392 1,78,690 1,35,048 6,39,130 Deposits (in crore >) 4,15,915 2,19,821 1,84,568 8,20,304 CASA ratio 36.10% 31.39% 31.59% 33.82% Domestic branches 4,292 2,885 2,432 9,609 PCR 58.27% 68.62% 66.60% 63.07% CET-I ratio 8.02% 8.43% 10.39% 8.63% CRAR ratio 11.78% 13.69% 12.30% 12.39% Net NPA ratio 6.85% 5.73% 5.71% 6.30% Employees 37,262 20,346 17,776 75,384 March 2019 financials Indian Bank + Allahabad Bank 7th largest PSB with business of 8.08 lakh crore (~1.9 times Indian Bank) Nationwide presence with strong networks in the South, North and East Scale and synergy benefits through: इंडियन बैंक Indian Bank ALLAHABAD BANK (A Govt. of India Undertaking) Doubling of business size Major scaling up of reach due to complementary networks High CASA and lending capacity in consolidated bank Same CBS platform (BaNCS) in both banks to enable quick realisation of gains Indian Bank + Allahabad Bank इंडियन बैंक Indian Bank ALLAHABAD BANK Indian Bank Allahabad Bank All....

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....ahabad Bank Amalgamated bank Total business (in crore) 4,29,972 3,77,887 8,07,859 Gross advances (in crore) 1,87,896 1,63,552 3,51,448 Deposits (in crore) 2,42,076 2,14,335 4,56,411 CASA ratio 34.71% 49.49% 41.65% Domestic branches 2,875 3,229 6,104 PCR 49.13% 74.15% 66.21% CET-I ratio 10.96% 9.65% 10.36% CRAR ratio 13.21% 12.51% 12.89% Net NPA ratio 3.75% 5.22% 4.39% Employees 19,604 23,210 42,814 March 2019 financials Canara Bank Union Bank of India Indian Bank Consolidated PSBs for strong national presence & global reach 82% of PSB business 56% of commercial bank Anchor bank Punjab National Bank NextGen PSBS Amalgamating bank(s) Oriental Bank of Commerce United Bank of India Business size* PSB rank by size CBS * 17.94 lakh cr. 2nd largest Finacle Syndicate Bank 15.20 lakh cr. 4th largest iFlex Andhra Bank 14.59 lakh cr. 5th largest Finacle Corporation Bank Allahabad Bank 8.08 lakh cr. 7th largest BANCS business SBI Bank of Baroda Amalgamated earlier Amalgamated earlier 52.05 lakh cr. 16.13 lakh cr. Bank Business size* To strengthen national presence Bank of India Central Bank of India 9.03....

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.... lakh cr. 4.68 lakh cr. Bank Business size* Indian Overseas Bank 3.75 lakh cr. To strengthen regional focus UCO Bank 3.17 lakh cr. Bank of Maharashtra 2.34 lakh cr. Punjab and Sind Bank 1.71 lakh cr. * March 2019 financials Governance Reforms सत्यमेव जयते Department of Financial Services Ministry of Finance Government of India Governance Reforms PSB Boards empowered To make management accountable to Board, Board committee of nationalised banks to appraise performance of GM & above (incl. MD) To make span of control manageable in large PSBS, post consolidation, Boards given flexibilty to introduce CGM level as per business needs To recruit Chief Risk Officer from market, at market-linked compensation to attract best available talent To enable Succession Planning, Boards to decide system of Individual Development Plans for all senior executive positions To ensure sufficient tenure, Boards given flexibility to prescribe residual service of two years for appointment of GM and above Governance Reforms Strengthening Board committee system Flexibility given to Boards of large PSBs to enhance sit....

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....ting fees of Non- Official Directors (NODs) For better Board committee functioning, Boards given mandate to reduce/rationalise Board committees Risk Management Committee given mandate to fix accountability for compliance of Risk Appetite Framework Longer term to Directors on Management Committee of Board (MCB) to enable them to contribute effectively MCB loan sanction thresholds enhanced by up to 100%, to enable focussed attention to higher value loan proposals Governance Reforms Enhancing effectiveness of Non-official Directors (NoDs) Leadership development NODs to perform role analogous to independent director Boards given mandate for training of directors, both for induction and for specialised purposes Boards given mandate to evaluate NOD performance annually on peer-review basis Executive Directors' strength in larger banks raised to 4, for better functional focus and thrust to technology Creation of leadership pipeline under BBB's Leadership Development Programme PSBs to drive growth सत्यमेव जयते Department of Financial Services Ministry of Finance Government of India Repositioning PSBs f....

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....or $5 trillion economy Wide-ranging Reforms Financially stronger PSBs Well-provisioned PSBs: 14 in profit Technology-driven banking Scale and synergy - Consolidation Governance strengthened Further capital Credit for: Regulatory compliance In crore Bank Amount Punjab National Bank 16,000 Union Bank of India 11,700 Bank of Baroda 7,000 Canara Bank 6,500 Indian Bank 2,500 Indian Overseas Bank 3,800 Central Bank of India 3,300 UCO Bank 2,100 United Bank of India 1,600 PSB Punjab & Sind Bank 750 Total 55,250 Thank You<BR> News - Press release - PIB....