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Public sector banks (PSBs) are going to flood the market with equity issuances in the next few years going by the remarks of the Finance Minister Arun Jaitley in Lok Sabha today.
These state-owned entities will mobilise as much as ₹ 1.10 lakh crore from the markets over the next four years to meet their fund requirements, he said in his reply to the discussions on the first batch of supplementary demand for grants for 2015-16.
This fund mop up (from markets) is besides the ₹ 70,000 crore capital infusion planned by the Government in these banks in the next four years.
Of the total ₹ 70,000 crore, Government has already earmarked ₹ 25,000 crore for this fiscal.
Lok Sabha later approved the first batch of supplementary demand for grants through a voice vote. This would pave the way for additional spend of ₹ 40,821.88 crore including ₹ 12,010 crore towards recapitalisation of PSBs.
However, the net cash outgo will aggregate to ₹ 25,495.24 crore with the balance matched by savings and enhanced recoveries.
Several opposition parties including Congress boycotted the proceedings of the lower house.
As regards the ₹ 12,010 crore allocated through the first batch of supplementary demand, Jaitley said that the department of financial services will decide the allocation between banks.
”Both the banks that need capital the most and the performing ones will get capital support. I don’t want performing banks to be discriminated against.
The performing banks have to be rewarded. It will improve their capacity to leverage and lend more”, Jaitley said.
Meanwhile, Jaitley saw good possibility of Indian economy recording growth of 8 percent this fiscal on the back of several initiatives by the Government including revival of stalled projects and pumping in more funds into PSBs.
He also highlighted that Indian economy would get a further push (bump up in GDP growth by 1-2 per cent) if the GST Bill were to be passed with the support of the Opposition parties.
However, Congress is in no mood to support the passage of the GST Bill (constitutional amendment Bill) in Rajya Sabha.
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