The finance minister said there is a need to bring about changes in many areas in state-run banks, including giving ‘far greater autonomy’ and allowing them to hire the best talent.

Finance Minister Arun Jaitley on Saturday termed the level of bad assets in the system as ‘unacceptable’ and promised more autonomy for state-run banks to run business with a ‘commercial mindset’.

"There are unacceptable levels of non-performing assets in some cases and the banks have to be given a sufficient amount of leeway . . . to deal with commercial issues with a commercial mindset," Jaitley told reporters on the sidelines of a two-day bankers' retreat in Pune.

The finance minister said there is a need to bring about changes in many areas in state-run banks, including giving ‘far greater autonomy’ and allowing them to hire the best talent.

The two-day banking conclave, which started on Friday, is being held at a crucial time when India is moving towards accelerating the pace of growth, he said.

The government, which is a majority owner in 27 public sector banks that control over 70 per cent of the system, wants to hear the problems plaguing the sector from the bankers and external experts as ‘they know the best where the shoe pinches’, he said.

"I am certain this conference is going to pave a way for a new roadmap," he added.

The meeting comes at a time when the gross non-performing assets in the system has touched 4.5 per cent in September 2014, and days after strong commentary from RBI about state-run lenders lagging behind their private sector rivals on asset quality management.

The finance minister said there was a need for the banking sector to fund infrastructure and manufacturing sectors to support the ambitions of higher growth.

"There is a need now for the banking system in India in a big way to finance infrastructure, manufacturing and infuse liquidity.

“There is also a need to conceive several reforms in the banking sector," he added.