New Delhi - The government on November 1 constituted an inter-ministerial committee headed by Finance Minister Arun Jaitley to oversee the merger of public sector banks (PSBs), following the recent announcement of a massive recapitalisation plan for the state-run lenders.
Apart from Jaitley, the "Alternative Mechanism" committee will have Defence Minister Nirmala Sitharaman and Railway Minister Piyush Goyal as its members, a Finance Ministry release said here.
The proposals cleared by the committee will be submitted before the Cabinet every quarter, it said.
The alternative mechanism may also direct the PSBs to examine proposals of consolidation.
"It will also receive inputs from the Reserve Bank of India before granting an in-principle nod to the proposals," the statement added.
The government said that after it approved the final schemes of banks' amalgation these would be tabled in both Houses of Parliament.
The government had earlier decided to set up an alternative mechanism to expedite the process of PSB consolidation, which would oversee the proposals coming from the PSB boards.
This followed State Bank of India's merger with its five associate banks and the Bharatiya Mahila Bank earlier this year.
In a stimulus package aimed to boost flagging economic growth, create jobs and increase credit flow, the cabinet last week approved a Rs 2.11 lakh crore recapitalisation plan for state-run banks and massive road infrastructure investment of nearly Rs 7 lakh crore over five years.
Of the support to banks, Rs 1.35 lakh crore will be raised through recapitalisation bonds and the remaining sum through budgetary support and market borrowings.
Announcing the package here, Finance Minister Arun Jaitley said the details of reform measures for the public sector banks would be unveiled at a later date.
Chief Economic Advisor Arvind Subranmanian clarified that the recapitalisation bonds would count as debt, while their exact nature would be made available in due course.