Banks must continue with reforms, says banking secy

Gurgaon, Nov. 12: Exhorting state-owned lenders to go in for reforms, financial services secretary Rajiv Kumar on Sunday said the banks are not going to get easy money as part of the `2.11-lakh crore recapitalisation plan of the government.

Speaking to the media, he said the `1.35-lakh crore recapitalisation bonds will be front-loaded and the contours of the bonds are being decided at the level of the finance minister.

The banks will also be getting nearly `18,000 crore under the Indradhanush plan.

“Everything is linked to the reforms which each board will consider within a short time as to what kind of business and how they want to go ahead. It’s not an easy money which is going to come, that is the main point. It has to be followed with a whole lot of reforms,” the secretary said.

Mr Kumar made the point that the reforms also include bank boards taking a stand and coming up with a clear plan on consolidation.

He emphasised that recapitalisation does not come on its own as it is followed and preceded by a whole lot of reforms.

As for the proposed recapitalisation bonds, he said the plan is to frontload them, meaning most of it would happen in the current year.

While announcing the government’s plan of capital infusion in public sector banks last month, finance minister Arun Jaitley had said it would be accompanied by reforms to enable the lenders to play a major role in the financial system and give a strong push to the job-creating MSME sector.

MR KUMAR said discussions took place on reforms including strengthening of bank boards, resolution of NPAs and HR issues so that they do responsive and responsible banking in future