Asserting government’s continued support to public sector banks (PSBs), Finance Minister Arun Jaitley has said that the Indradhanush plan which envisages Rs 70,000 crore being given from the central budget is not the last step as far as recapitalisation is concerned and the government will fully support the public sector banks, since they have a very important role to play in supporting a large number of social programmes and extending the reach of banking and supporting infrastructure in the country.
Jaitley said the government has carried out the exercise of capitalisation of PSBs to conform with regulatory capital norms as well as for driving credit growth to cater to the needs of a growing economy. As part of Indradhanush scheme, the government has decided to infuse Rs 70,000 crore from budgetary resources. The second tranche of capital that is Rs 1.10 lakh crore would come from the central government policy that equity of public sector banks could be brought down, but certainly kept at a minimum level of 52 per cent
The finance minister while talking about the growing non-performing assets (NPAs) in the PSBs said that the problem of NPAs was due to some people not paying up the banks for the loans taken and the burden coming on to the taxpayer. These 20 to 30 large accountholders will have to realise that banks have to be repaid. If the current promoters are not in a position to repay back, then they have to develop alternate corporate strategies so that the companies pay back. He further said that once the market conditions with regard to the valuation of these banks improves, then the bank shares itself will be used for their further capitalisation.
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