It's freedom for PSU banks!

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.
• 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.