Aiming at maintaining healthy books of public sector banks, Finance Minister Arun Jaitley on Wednesday charted out the government’s recapitalisation plans, underlining that all loans above Rs 250 crore will undergo special monitoring.
The capital infusion plan for 2017-18 includes Rs 80,000 crore through recap bonds and Rs 8,139 crore as budgetary support.
“We have announced Rs 2.11 lakh crore recapitalisation of PSBs in October 2017. I have already moved a supplementary grant in Parliament on this. 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.
“We inherited a very major problem. The problem is of the past. Our objective was to find solution and create an institution so that the mistakes are not repeated,” he said.
The government has decided to give Rs 8,800 crore to State Bank of India, 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.
Jaitley said while planning recapitalisation the government had two objectives – which bank would get how much money and various steps to be taken to ensure that the PSBs follow higher standards.
There are 21 PSBs in the country that comprise 70 per cent of the banking industry, said Rajiv Kumar, Banking Secretary.
“As discussed earlier this recapitalisation will be front-loaded depending on the performance and merit of the PSB,” said Kumar.
Allaying fears, he said: “Depositors’ money in PSB is safe.”
He also added PSBs should give loans responsibly so that there are no non-performing assets.