Bank recapitalization plan would increase lending to MSMEs: Fin Min


As Jaitley pointed out, the objective of the exercise is to keep the PSBs in good health, a prime responsibility of the government.

"The capital infusion for the PSBs would be contingent on performance, and the whole-time directors of the PSBs would be assigned theme-wise reforms to oversee", Financial Services Secretary Rajiv Kumar said, while making a presentation about the reforms agenda. The government has chose to give Rs 8,800 crore to the SBI, Rs 5,375 crore to Bank fo Baroda, Rs 4,865 crore to Canara Bank and Rs 4,524 crore to Union Bank among various other PSBs.

The Centre announced the capital it was allocating for 20 public sector banks, including a Rs 8,800-crore fund infusion for State Bank of India and Rs 5,473 crore for Punjab National Bank.

"This is in contrast to market expectations of bigger/healthier banks receiving a higher share of capital", Jeffries said.

Mr Jaitley said that the Non Performiong Assets (NPAs) was a major problem which NDA Government inherited and trying to find out the solution for it.

There will be a separate stressed asset vertical in each of the PSBs for cleaner and timely recovery. The government said that higher capital for weak banks is being given to ensure that they meet "regulatory requirement" on minimum capital.

The finance ministry said that the Rs 80,000 crore recapitalisation bonds, to be issued to PSBs, will not have an impact on fiscal deficit as they will be cash neutral. There is no proposal yet to merge banks, which is another positive for stronger banks like BoB and SBI, they say.

Palestinian killed in gun battle with Israeli army
He was the son of Nasser Jarar, a senior Hamas terrorist responsible for suicide bombings who was killed by the IDF in 2002. According to Wafa , the official Palestinian news agency, Jarrar used an automatic weapon to fire at the Israeli soldiers.

Banks told to limit exposure to big corporate loans to 10% in the case of consortium.

"Many banks entered the overseas markets".

The total amount is around 30 per cent of the state banks' equity base and is a significant shift away from the earlier drip-feed approach.

Analysts had said mandating reforms would be critical to prevent banks from engaging in the same indiscriminate lending that led to the current problems.

He said, every deposits of the people in banks are safe as banks are the article of faith.

Economic affairs secretary S.C. Garg said that these bonds will not have Statutory Liquidity Ratio (SLR) and have tenure of 10-15 years. Bank of India, would get Rs 9,232 crore and State Bank of India, would get Rs 8,800 crore.

Among banks now under the PCA, UCO Bank will get Rs 6,507 crore, Central Bank of India Rs 5,158 crore, Indian Overseas Bank Rs 4,694 crore, Oriental Bank of Commerce Rs 3,571 crore, Dena Bank Rs 3,045 crore, Bank of Maharashtra Rs 3,173 crore, United Bank of India Rs 2,634 crore, Corporation Bank Rs 2,187 crore and Allahabad Bank Rs 1,500 crore.