RBI's Rajan says capital infusion of Rs 25,000 crore into PSBs adequate, a good beginning
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Reserve Bank Governor Raghuram Rajan today said Rs 25,000 crore of capital infusion planned by the government in public sector banks this fiscal is "adequate and a good beginning". While Finance...
PSU banks to get Rs 70,000 crore fresh capital in next 4 years
Rs 25,000 crore capital will be allocated through three tranches Fresh fund infusion to boost GDP growth The finance ministry on Friday outlined a Rs 70,000 crore capital infusion plan into PSU banks over four years to enable them to increase funding to boost the economic activity in the country. It is a long overdue step. The government in the past has talked about it. But this time the government is actually implementing it. This will gave a boost for investment and growth in India, said finance minister Arun Jaitley. As part of the bank recapitalisation plan, the Centre has said that it will infuse Rs 25,000 crore in the current fiscal, which is much higher than the amount earmarked in the Budget at about Rs 7,940 crore. RBI governor Raghuram Rajan said that the Rs 25,000 crore capital infusion by the government in public sector banks is adequate and a good beginning. As per the plan, in the next FY, another Rs 25,000 crore will be infused into the banks. In the next two FYs Rs 10,000 crore will be given to banks in each year. The finance ministry said PSU banks as of now are adequately capitalised but would need another Rs 1,80,000 crore over the next four years. Of this, the government plans to provide Rs 70,000 crore through budgetary support. Improved valuations coupled with value unlocking from non-core assets as well as improvements in capital productivity, will enable PSU Banks to raise the remaining Rs 1,10,000 crore from the market, said the ministry. In the supplementary demand presented in the Parliament, an amount of Rs 12,000 crore has been provided, in addition to Rs 7,940 crores already provided in the budget of FY 2015-16. The remaining Rs 5,000 crore would be provided in the second supplementary later this year. The Rs 25,000 crore capital will be allocated through three tranches. In the first tranche, about 40 per cent of this amount will be given to those banks which require support. In the second tranche, about 40 per cent capital will be allocated to the top six banks SBI, BoB, BoI, PNB, Canara Bank, and IDBI Bank so as to strengthen them to play a vital role in the economy. The remaining portion of 20 per cent will be allocated to the banks based on their performance during the three quarters in the current year judged on certain performance. This will incentivise them to improve their performance, said finance ministry. It pointed out that PSU banks play an important role in the economy of India.
Bank bailout blueprint ready
The Narendra Modi-government today unveiled a four-year, Rs 1,80,000 crore programme to recapitalise public sector banks that will require the government to stump up Rs 70,000 crore with the remaining Rs 1,10,000 crore expected to be raised from the capital markets.
PSBs' Rs 1.8 lkh cr capitalisation plan to boost economy: FM
Government will infuse Rs 70,000 crore in state-run banks over four years, while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirements. The government has laid out the four-year programme for Rs 1.8 lakh crore capitalisation of public sector banks with a view to boosting investment and growth in the economy, Finance Minister Arun Jaitley said. "It is a long overdue step. Government in the past has talked about it. But this time government is actually implementing it," he said in a statement. This will boost investment and growth in India, he added. Public sector banks will need to raise Rs 1.10 lakh crore from markets to meet more than half of their capital requirement of Rs 1.80 lakh crore over the next four years. Of the total estimated by the Finance Ministry, the government is willing to provide only Rs 70,000 crore - Rs 25,000 crore each in current as well as the next fiscal and Rs 10,000 crore each in 2017-18 and 2018-19. "Improved valuations coupled with value unlocking from non-core assets as well as improvements in capital productivity will enable PSBs to raise the remaining Rs 1,10,000 crore from the market," a Finance Ministry statement said. Earlier in the day, Jaitley sought Parliaments nod for additional capital infusion of Rs 12,010 crore in PSU banks. Along with the Budget provision of Rs 7,940 crore, the total planned capital infusion would go up to around Rs 20,000 crore. "Rs 20,000 crore (capital infusion) would happen as early as possible. It can happen by September after we get approval from Parliament," Financial Services Secretary Hasmukh Adhia told reporters here. The remaining Rs 5,000 crore would be provided in the second Supplementary later this year. "The Rs 25,000 crore capital this year will be allocated through three tranches," the ministrys statement said. Of the total amount, Rs 10,000 crore would be provided to weak PSBs, Adhia said, adding that the non-performing assets of PSBs are likely to show improvement in next two quarters. He further said that the third tranche of capital infusion will come in the last quarter of the current fiscal which will be given to banks which will show improvement in their performance in the nine month period. Gross NPAs of PSBs at the end of March quarter stood at 5.20 per cent, against 5.63 per cent in December. The estimate of capital requirement is "based on credit growth rate of 12 per cent for the current year and 12 to 15 per cent for the next three years, depending on the size of the bank and their growth ability", said the Finance Ministry statement.
PSBs' Rs 1.8 lkh cr capitalisation plan to boost economy: FM
Government will infuse Rs 70,000 crore in state-run banks over four years, while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirements. The government has laid out the four-year programme for Rs 1.8 ...
7 reasons why PSBs need Rs 70,000-crore lifeline
Planning to inject $11 billion of capital into debt-laden state banks over the next four years, Finance Minister Arun Jaitley on Friday sought Parliament's approval to boost budget spending by $4 billion in the current fiscal year.
Capital infusion of Rs 25K cr a good start: Rajan
NEW DELHI: Reserve Bank Governor Raghuram Rajan today said Rs 25,000 crore of capital infusion planned by the government in public sector banks this fiscal is "adequate and a good beginning". While Finance Minister Arun Jaitley had in Budget for 2015-16 provided Rs 7,940 crore towards recapitalisation of PSU banks, he today sought Parliament nod for another Rs 12,010 crore in the first supplementary demand for grants. Another Rs 5,000 crore will be provided in subsequent supplementary demand through the year totaling Rs 25,000 crore of capital infusion. "Allocation for first-year recapitalisation is adequate," Rajan said when asked to comment on the infusion plan. "It's a good beginning," he said after his customary meeting with Jaitley ahead of the third bi-monthly monetary policy on August 4. The Finance Ministry, in a statement, said public sector banks (PSBs) as of now are "adequately capitalised", but would need Rs 1,80,000 crore extra capital over the next four years (up to FY19). Of this, the government plans to provide Rs 70,000 crore through budgetary support -- Rs 25,000 crore each in current and next fiscals and Rs 10,000 crore each in 2017-18 and 2018-19. Banks would be required to raise the remaining amount of Rs 1.1 lakh crore from the market, the statement said. RBI Deputy Governor R Gandhi said the decision to infuse Rs 70,000 crore over the next four years was a welcome move by the government. As for the Rs 1.1 lakh crore required to be tapped by banks over the next four years, he said there was enough appetite in the market for that.