Govt to infuse over Rs 88139 crore in 20 Banks

Govt to infuse over Rs 88139 crore in 20 Banks”

"The entire objective of this exercise has been that it is government's prime responsibility to keep PSBs in good health", Jaitley told reporters at a press meet.

"State Bank of India will get Rs 8,800 crore, Rs 3,571 crore for Oriental Bank of Commerce, Rs 3,045 billion for Dena Bank, Rs 5,158 crore for Central Bank of India, Rs 4,694 billion for Indian Overseas Bank, Rs 9,232 billion for Bank of India", banking secretary Rajeev Kumar said addressing the media.

When the original plan of injecting Rs 2.11 lakh crore capital was announced last October, officials, including Chief Economic Adviser Arvind Subramanian, had indicated that the government will follow a "selective and differential approach" wherein priority would to be given to strong lenders while weak banks may have to either shrink in size or not grow from the current position.

The ministry is working on the various steps to be taken to ensure that the governance of the banks follows highest standards, said Finance Minister Arun Jaitley.

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There will be a separate stressed asset vertical in each of the PSBs for cleaner and timely recovery.

"While PCA banks have got a sizeable amount under the recapitalisation, few banks which are relatively better off have also got funds which should improve their balance sheets and allow them to raise further capital from the markets; and that could drive the next leg of growth for them", he said. It is only recently that the government has made a decision to recapitalize banks through bond issuances, and is exploring the capital market, rather than paying directly from its budget. In that light, why is a bank that has indulged the most in reckless lending to wilful corporate defaulters, including to the tainted liquor baron Vijay Mallya, should be given such preferential treatment, that too before it gets privatised?

"Capital will be given to banks on the basis of their performance and credentials", Kumar said. But has India's public sector bank recapitalisation programme come at the right time? For the PCA banks, the principal object appears to be that they maintain their regulatory capital. "There is no fiscal impact of bond issuance to banks..." He said, stringent norms for disbursal of high value loans have been framed, with strict surveillance on big loan defaulters and mandatory reporting of loans of over 250 crore rupees. These will be swap deals and cash neutral. He added that the bonds are to have a maturity period of 10-15 years and would be issued in six tranches.

On similar lines, Allahabad Bank fell 3.21 per cent, 2.43 per cent and United Bank of India lost 0.27 per cent.

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