Govt to infuse over ₹88,100 crore in stateowned banks
RECAP PLAN IDBI Bank gets the most — ₹10,610 cr; Banks will need to monetise noncore assets, rationalise branches
The government on Wednesday announced ₹88,139 crore capital infusion in 20 public sector banks (PSBs) during the current fiscal, with IDBI Bank getting the most -- ₹10,610 crore.
Finance minister Arun Jaitley said his ministry had undertaken a detailed exercise on the amount of capital to be infused into the PSBs.
The unprecedented ₹2.1 lakh crore bank recapitalisation plan announced in October last year was to be spread over two financial years — 2017-18 and 2018-19.
During the current fiscal, ending March 31, State Bank of India will get ₹8,800 crore capital and Bank of India, ₹9,232 crore. UCO Bank will get ₹6,507 crore; Punjab National Bank — ₹5,473 crore; Bank of Baroda — ₹5,375 crore; Central Bank of India — ₹5,158 crore; Canara Bank ₹4,865 crore; Indian Overseas Bank — ₹4,694 crore and Union Bank of India — ₹4,524 crore.
Oriental Bank of Commerce would get ₹3,571 crore, Dena Bank ₹3,045 crore, Bank of Maharashtra ₹3,173 crore, United Bank of India ₹2,634 crore, Corporation Ban ₹2,187 crore, Syndicate Bank ₹2,839 crore, Andhra Bank ₹1,890 crore, Allahabad Bank ₹1,500 crore, Punjab and Sind Bank ₹785 crore.
Jaitley said steps need to be taken to ensure governance of banks follows highest standards and there is a need for institu-
NEW DELHI:
tional mechanism to ensure past is not repeated.
“We inherited a very major problem and therefore, we have been involved in finding a solution to that problem”, he said, adding that “our role really is not only to find a solution but also to create an institutional mechanism to make sure that what happened in the past is not repeated”.
The PSBs are faced with mounting non-performing assets (NPAs) or bad loans, putting the financial sector under stress, and need to be recapitalised.
“Now the entire object of this exercise is that the government has the prime responsibility of keeping the public sector banks in good health,” Jaitley said.
Rajeev Kumar, Secretary, department of financial services, said bank recapitalisation is dependent on performance and reforms undertaken by the lenders.
He said loans above ₹250 crore will undergo special monitoring.
The bank recapitalisation bonds to state banks will be exempt from the amount lenders must set aside to buy sovereign bonds known as statutory liquidity ratio (SLR), Kumar said.
These bonds worth ₹80,000 crore ($12.56 billion) will be issued in 2018 and will not be tradable, Kumar added.
The most traded bond yield eased by 1 basis point to 7.53% from 7.54% before the announcement, as traders were relieved that the bonds will not eat into the demand for SLR bonds.
PTI AND REUTERS