More funds for banks to boost jobs, growth: FM

Wants public sector banks to become robust enough to sustain itself

Gurgaon, Nov. 12: Finance minister Arun Jaitley said that the government has decided to inject more capital into public sector banks (PSBs) to strengthen the banking system and spur economic growth.

In his address to top officials at the first PSB Manthan here, Mr Jaitley said that capital for state-owned banks will prompt them to increase credit flow to micro, small and medium enterprises (MSMEs) so that the “third engine” of private investment is fired up to propel growth and create jobs.

Last month, the government had unveiled a whopping `2.11-lakh crore two-year roadmap to strengthen non-performing asset (NPA)-hit public sector banks (PSBs), which includes recapitalisation bonds, budgetary support and equity dilution.

“We need the third engine (private investment) also to fire and a robust private sector and MSME sector so that the optimum growth rate, which we have the potential for, can be reached,” he said.

Gurgaon, Nov. 12: Finance minister Arun Jaitley on Sunday said more capital for stateowned banks will prompt the PSBs to increase credit flow to MSMEs so that the ‘third engine’ of private investment is fired up to propel growth and create jobs.

Last month, the government had unveiled a whopping `2.11-lakh crore two-year road map to strengthen the NPA-hit public sector banks (PSBs), which includes recapitalisation bonds, budgetary support and equity dilution.

As for the engines of growth, there has been a significant increase in public investment and FDI inflows, but the private investment has continued to lag.

“If you look at the big picture of the economy where governments are spending a lot of public money, a lot of foreign investment is coming in.

“We need the third engine (private investment) also to fire and a robust private sector and MSME sector so that the optimum growth rate which we have the potential for can be reached,” Mr Jaitley said in his address to top officials at the PSB Manthan here.

He said one of the focus areas that the banks have taken up is to support the MSMEs (micro, small and medium enterprises) because the sector creating jobs and giving boost to the economy has no access to international finance or bond market.

Mr Jaitley also said the government has decided to put in more capital through bonds and banks’ equity expansion and “therefore, it is the country which is virtually going to pay to keep the banking system in good health”.

He assured the bankers who gathered here that “you won’t find us interfering” in commercial transactions, but “when the system is making all these changes and all these monetary contributions in order to strengthen the banking system, we want robust public sector banking system so that your ability to support growth itself increases”.

Non-performing assets of public sector banks have increased to `7.33 lakh crore as of June 2017, from `2.78 lakh crore in March 2015.

ONE OF THE FOCUS areas that the banks have taken up is to support MSMEs because the sector creating jobs and giving boost to the economy has no access to international finance or bond markets

IN THE last three-and-a-half years, the government has pumped in more than `51,000 crore capital in public sector banks

AS FOR the engines of growth, there has been a significant increase in public investment and FDI inflows, but the private investment has continued to lag We need the third engine (private investment) also to fire and a robust private sector and MSME sector so that the optimum growth rate which we have the potential for can be reached,

— ARUN JAITLEY