No criminality in business default: PSB consolidation from April

Bill would provide ‘ease of living’ for law-abiding corporates, de-clog criminal justice system

GN Bureau | March 4, 2020


#Union cabinet   #finance ministry   #Companies Act   #banking   #Public Sector Banks   #Nirmala Sitharaman  


Genuine and bona fide default in business will no longer lead to the tag of criminality and punishment, as the government has decided to amend the company law. The union cabinet, chaired by prime minister Narendra Modi, on Wednesday approved the Companies (Second Amendment) Bill, 2019 to amend the Companies Act, 2013. The cabinet approved the mega consolidation of ten public sector banks (PSBs) from April 1.

The bill would remove criminality under the Act in case of defaults, finance minister Nirmala Sitharaman explained. Criminality can be determined objectively. This will bring relief in cases of defaults where the element of fraud is lacking or which do not involve larger public interest. This would also lead to further de-clogging of the criminal justice system in the country. The Bill would also further ‘ease of living’ for law-abiding corporates.

Earlier, the Companies (Amendment) Act, 2015 amended certain provisions of the Act to remove difficulties faced in implementation of various provisions of the Act.

Meanwhile, in another decision, the cabinet approved the consolidation of public sector banking on the following lines:

(a)  Amalgamation of Oriental Bank of Commerce and United Bank of India into Punjab National Bank
(b)  Amalgamation of Syndicate Bank into Canara Bank
(c)  Amalgamation of Andhra Bank and Corporation Bank into Union Bank of India
(d)  Amalgamation of Allahabad Bank into Indian Bank

The amalgamation will result in the creation of seven large PSBs with scale and national reach with each amalgamated entity having a business of over Rs 8 lakh crore. It would help create banks with scale comparable to global banks and capable of competing effectively in India and globally. Greater scale and synergy through consolidation would lead to cost benefits which should enable the PSBs enhance their competitiveness and positively impact the Indian banking system, said an official note.

In addition, consolidation would also provide impetus to amalgamated entities by increasing their ability to support larger ticket-size lending and have competitive operations by virtue of greater financial capacity. The adoption of best practices across amalgamating entities would enable the banks improve their cost efficiency and risk management, and also boost the goal of financial inclusion through wider reach.

Further, with the adoption of technologies across the amalgamating banks, access to a wider talent pool, and a larger database, PSBs would be in a position to gain competitive advantage by leveraging analytics in a rapidly digitalising banking landscape.

Comments

 

Other News

Four trends that will shape healthcare post-Covid

The Covid-19 pandemic has disrupted economies and healthcare systems across the world. Even in the countries like the US that have the highest spend on healthcare and public health emergency preparedness, the impact of coronavirus pandemic on health and livelihoods of people has been tremendous. There are

India to play leading role in global revival: Modi

India would play a leading role in the global revival, prime minister Narendra Modi said on Thursday, as he addressed the inaugural session of India Global week via video-conference. He said that this is closely linked with two factors. “First is - Indian talent and second is India`s

BMC spells out numbers to counter Fadnavis’ claims

The BrihanMumbai municipal corporation (BMC) has countered Maharashtra leader of opposition Devendra Fadanvis’s suspicions of fewer Covid-19 tests, as it outlined various measures it has adopted since the first test conducted on February 3, and how it has gradually brought down the number of cases in

Mumbai opts for “most liberal Covid-19 testing” in the world

As part of the four T strategy of trace-test-track-treat, Mumbai – the most affected city in India – has decided to make Covid-19 tests accessible to all. The municipal corporation of Greater Mumbai (MCGM) has come out with guidelines allowing all laboratories to conduct RT-PCR (

Exit the Dragon, Enter the Tiger

In a major development on July 6, the Chinese army started moving back its tents, vehicles as well as troops from locations where disengagement was agreed upon in eastern Ladakh’s Galwan Valley. This is a significant milestone in regional geopolitics with India having been successful in isolating the

Hiranandani Group launches ambitious data centre project

With the Covid-19 pandemic pushing more online activity and the capacity usage of data centres going up, India’s largest data centre (DC) building and the biggest tier-IV data centre, Yotta NM1,the  second largest in the world, has been launched in Mumbai. The launch event on Tue



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter