In a move that would unclog credit flows to investors, public sector banks (PSBs) have resolved that any decision taken by 66% of creditors under the consortium lending arrangement will be accepted by all. After meeting the chiefs of 13 PSBs to discuss how best to improve credit availability to industry, interim finance minister Piyush Goyal said the threshold, in sync with a similar rule under the Insolvency and Bankruptcy Code to approve a resolution plan, will help banks address any issue fast. The minister also stressed that the deposits with state-run banks are \u201c100% safe\u201d and the government will provide adequate capital to all of them, if required. All 21 PSBs have decided to support genuine borrowers and MSMEs that are in need of more credit in two stages, Goyal said. In the first stage, they will scan around 4,500 genuine accounts with an exposure between rs 200 crore and Rs 2,000 crore and see if these companies need fresh loans to support growth. Those with exposure up to `200 crore will also be given a thrust in the second stage. The decision is aimed at addressing apprehension that since 11 of the 21 PSBs are under the prompt corrective action framework of the Reserve Bank of India (RBI), their ability to lend to spur economic growth is limited. Two of these stressed PSBs, in fact, are facing restriction to lend.State Bank of India chairman Rajnish Kumar said he has shared his bank\u2019s experience on mergers and there is a genuine need for further consolidation in the banking sector. However, it\u2019s up to the individual board of PSBs to consider this issue, he added. Asked about the RBI\u2019s demand for more power, Goyal said: \u201cWe believe that powers are available with the RBI and that is the conversation that the government and Reserve Bank will have amongst themselves. If there are more additional powers required, the government is open to that.\u201d RBI governor Urjit Patel last week reportedly told a parliamentary panel that the central bank required more powers to regulate PSBs properly. Patel was called to offer his take on huge bad loans with state-run banks and the $2.2-billion fraud at the Punjab National Bank (PNB). At present, while all private banks are regulated by the RBI alone, PSBs are regulated by both the government as well as the central bank.\u00a0 In fact, after facing criticism over the supervisory failure to detect the fraud at PNB involving jewellers Nirav Modi and Mehul Choksi, Patel had in March asserted that regulation of banks must be ownership-neutral. As per the existing system, the RBI cannot remove (errant) directors, chairman and management at PSBs, although it can do so in private banks if the situation so warrants. Section 36ACA(1) of the Banking Regulation (BR) Act that provides for supersession of a bank board is also not applicable to PSBs. The central bank cannot force a merger of PSBs, either. PSBs\u2019 banking activity does not require a licence from the RBI; hence, the central bank cannot revoke a licence, as it can in the case of private banks. As for capital infusion, PSBs were offered Rs 90,000 crore (of which Rs 80,000 crore was in the form of bonds) in 2017-18 and securities worth another Rs 65,000 crore is to be provided to them in the current fiscal. Any further infusion, if finally approved, ahead of an election year could be done through recapitalisation bonds \u2014 which will be the government\u2019s off-budget liabilities \u2014 to avoid worsening fiscal deficit. However, the interests on such bonds are part of the budget.