Money & Banking

‘PSBs told to submit roadmap for fund-raising in a month’

Press Trust of India New Delhi | Updated on January 09, 2018 Published on November 15, 2017

Finance Minister Arun Jaitley had said earlier that higher capital for PSBs would prompt them to increase credit flow to MSMEs

As part of a recapitalisation exercise, the Finance Ministry has asked State-owned banks to submit their board-approved roadmaps for raising funds and strengthening core activities in about a month.

The Centre had last month unveiled a whopping ₹2.11-lakh crore two-year programme to strengthen NPA-hit public sector banks (PSBs), which includes recapitalisation bonds, budgetary support and equity dilution. Banks should follow responsive and responsible banking, a senior official said, adding that each board should decide in a month or so before recapitalisation actually takes place as to what are the future areas they would like to work on.

They should look at their portfolios, stressed assets, non-core activities, fund raising from market and core competencies, the official said.

This will help in better utilisation of the money that the government intends to provide to them, he added.

In order to enhance the capital base of bad loan-ridden banks, the two-year plan includes infusion of ₹1.35 lakh crore by way of recapitalisation bonds, ₹18,100 crore through budgetary support and ₹58,000 crore from the market.

In the last three-and-a-half years, the government has pumped in more than ₹51,000 crore capital in PSBs.

The proposed capital infusion will help enable banks to get into their core activity of lending, which has seen muted growth in the past several months due to pressure of stressed assets.

Earlier this week, Finance Minister Arun Jaitley had said that higher capital for the PSBs will prompt them to increase credit flow to MSMEs so that the ‘third engine’ of private investment is fired up to propel growth and create jobs.

Published on November 15, 2017
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