New Delhi, January 25: On January 24th, the government unveiled its reform plan of infusing over Rs 88, 000 crore through recapitalization to public sector banks. These bonds are going to be allotted to 20 state-run banks during the present financial year. A sum of Rs 52,311 crore is going to be allocated to 11 weak banks to help them maintain a minimum capital. And Rs 35, 828 will be kept aside for 9 strong banks, as reported by Indian Express. This project by the government is linked to the six-point reform agenda that is aimed at aiding the growth and restoring the potential of banks.
PSU banks will now be required to alter their lending systems in terms of advancing loans to big business organizations. They must also monetize non-crore assets, streamline overseas branches, utilize advanced technology and plan to recover loans that have failed. According to reports from The Times of India, Finance Minister, Arun Jaitley stated that the reforms will address the regulatory capital requirement of PSB’s. Banks will have to adopt the measures laid down by the Finance Ministry. They mostly surround six concerns – customer responsiveness, responsible banking, digitalization, credit offtake, PSBs as Udyami Mitra and development of the brand.
Among the various PSB’s, highest capital of Rs 10,610 crore will be given to IDBI. Following it is Bank of India with Rs 9,232 crore, Rs 8,800 crore to State Bank of India and UCO Bank will get Rs. 6,507 crore.
By the end of March, a total of Rs 1 lakh crore will be guided towards PSBs. For this, Rs 80,000 crore will be generated from recapitalisation bonds, Rs 8,139 crore via gross budgetary support and Rs 10,312 crore of funds will be derived from the market.