20 PSU banks to get R 88K crores in fresh funding
As part of its recapitalisation roadmap, the finance ministry said on Wednesday that ` 88,139 crores will be infused into 20 public sector banks in 2017- 18, including ` 80,000 crores through recapitalisation bonds and ` 8,139 crores as budgetary support.
Another ` 10,312 crores funds will be raised from the market for the current fiscal, taking the total capital inflows to around ` 1 lakh crores in 2017- 18. In October, the government had unveiled ` 2.11 lakh crore two- year capital infusion plan in state- owned banks to strengthen their balance sheets. This will free state- owned banks’ balance sheets so that they can start lending.
Finance minister Arun Jaitley said steps need to be taken to ensure that the governance of banks follows the highest standards. “We inherited a very major problem and therefore have been involved in finding a solution to that problem,” he said. “Now the entire
◗ Union finance minister Arun Jaitley said steps need to be taken to ensure that the governance of banks follows the highest possible standards
object of this exercise is that the government has the prime responsibility
of keeping the public sector banks in good health,” Mr Jaitley said.
The finance ministry said that the ` 80,000 crore recapitalisation bonds, to be issued to public sector banks ( PSBs), will not have impact on fiscal deficit as they will be cash neutral.
Economic affairs secretary S. C. Garg said that these bonds will not have Statutory Liquidity Ratio ( SLR) and have tenure of 10- 15 years. SLR is a portion of deposits that banks need to invest in government securities.
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 and red flags whenever the original covenants of the loans are violated. Bank have also been instructed to become more professional. Finance ministry would gauge the performance of banks on parameters like customer responsiveness, responsible banking, credit offtake, MSME lending, deepening financial inclusion and digitalisation.
IDBI Bank will get the most capital infusion of ` 10,610 crore in the current fiscal. 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 while 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.