New Delhi: The boards of all ten banks whose merger was announced last month have accorded in-principle approval to the proposals, said Finance Minister Nirmala Sitharaman on Thursday.

She reviewed the performance of banks at a meeting with the top management of public sector banks (PSBs) and also took stock of the implementation of measures announced since August 23 including consolidation to support economic growth. An official press note said the discussion was focused on supporting credit needs of the economy, in particular the needs of sectors such as non-banking financial companies (NBFCs) and housing finance companies (HFCs) and micro, small and medium enterprises (MSMEs), sectors under stress besides enabling better access to cheaper credit.

"Since the announcement of the consolidation of public sector banks on August 30, boards of all ten banks have accorded in-principle approval to the proposals," the release said.

The banks assured the Finance Minister that there will not be any disruption in credit decision making due to the process of amalgamation. They said that employees' interests were being protected through the best of benefits and learning and growth opportunities.

Finance Minister Sitharaman had on August 30 announced the merger of 10 public sector banks into four.

She had announced that Indian Bank will be merged with Allahabad Bank (anchor bank - Indian Bank); PNB, OBC and United Bank to be merged (PNB anchor bank); Union Bank of India, Andhra Bank, and Corporation Bank to be merged (Union Bank of India anchor bank).

She had also announced the merger of Canara Bank and Syndicate Bank to be merged (Canara Bank anchor bank).

The press note said that at the end of August 2019, overall credit growth in the banking sector stood at 10.1 per cent on a year-on-year basis.

"This is in parallel with record recoveries and cleaning of bank balance-sheets showing better quality of asset book," it said.

The release said that banks loan disbursement to key sector remains robust, with disbursement of Rs 11.83 lakh crore done for MSME sector in 2018-19 as against Rs 8.53 lakh crore done in 2017-18.

Banks have also continued to support the housing sector by disbursing Rs 2.19 lakh crore for home loans in 2018-19 as against Rs 1.81 lakh crore in 2017-18.

The press note said that following the announcement on August 23, 2019, banks have already entered into 14 tie-ups with NBFCs for co-originating loans with another 36 such tie-ups in the pipeline.

"This will help borrowers in terms of better access to affordable credit while yielding business benefits to both banks and NBFCs," it said.

The press note said that acting upon their commitment to review lending rates in the context of policy rate cuts, PSBs have effected weighted average rate cuts of 27 basis points till August 2019 and another 10 out of the 18 PSBs have effected additional rate cuts ranging from 15 to 5 basis points in the current month.

"To enable automatic transmission of externally benchmarked rates, 15 PSBs have already introduced repo-rate-linked loan products for housing and vehicles, consumer credit, cash credit limits, and mortgage-based loans. Already, over 1.08 lakh repo-linked proposals, amounting to over Rs 40,000 crore, have been sanctioned," the press note said.

It said that the remaining three PSBs will also be introducing such products by October 1. These measures are aimed at considerable improvement in access to affordable credit.

Referring to announcements on enhancing customer ease for credit wherein online tracking of loan applications and mandatory release of security documents 15 days post loan closure was proposed, the release said that PSBs have passed on instructions up to branch level and process to track it electronically is also underway.

This will help increase the transparency of loan processing for customeRs

It said that the Central Vigilance Commission (CVC) has issued directions to support decision-making and to prevent harassment for genuine commercial decisions by bankeRs

CVC has said that internal advisory committee in banks that would classify cases as vigilance and non-vigilance along with setting up of an advisory board for first level examination to decide whether the case is a criminal act or a genuine commercial decision and accordingly, recommending the future course of action for large fraud cases above Rs 50 crore.

"This will instil a sense of protection among bankers from prosecution for genuine decisions and promote lending. Public Sector Bank heads expressed their resolve to take a prudent commercial decision without any fear now," the press note said.

To boost the resolution process, OTS (one-time settlement) system has been made more transparent with the introduction of checkbox approach based policy by 11 public sector banks, while remaining banks are at various stages of implementation.

"This will ensure faster resolution through a non-discretionary and non-discriminatory system," said the press note.