Praising the positive role being played by public sector banks, Finance Minister Arun Jaitley today said the government has not yet decided on the exact recapitalisation figures for them.
“I have not decided on the recapitalisation figure. I had mentioned the figure in the budget this year. But what we require would be much more than mentioned in the budget,” Jaitley told reporters on the sidelines of a public event at the prestigious Stanford University where he spoke about India’s economic future.
Responding to questions after his remarks, Jaitley said the government has decided in principle for the recapitalisation of public sector banks.
“Governmental equity is being brought down to 52 per cent. That would help in bringing private capital. From budgetary resources this year and next year we intend to induct some money into banks,” he said.
Jaitley praised the role being played by public sector banks.
“In promoting Indian businesses including infrastructure and when we are trying to push stalled projects, the public sector banks have had a positive role. Secondly their strength and network is huge. Thirdly the good sign is that the private sector banks are also coming up in competition. The forth factor is that public sector banks in social responsibilities have done tremendous jobs. The private sector banks have lagged behind (here),” he said.
At the same time, he acknowledged that the public sector banks have been lacking in delinking management from various kinds of pressures from appointments to enactment.
Noting that he scrapped a number of appointments when he took over, Jaitley said the ministry has now introduced a highly professional system of inducting people into these banks, segregating the Chairman and CEOs position.
“On the 14th and 15th interviews were being held, probably the selections are in final stages. All the heads would probably be filled up. We have also opened up executive positions in these banks to the people coming from the private sector. But that still does not solve the problem of the financial health of the bank, which we inherited,” Jaitley said.
Talking about the Asian Infrastructure Investment Bank, Jaitley said India will be the second largest shareholder in it after China.
Jaitley said he would be heading to Beijing later this month for India to officially join the China-led bank.
Jaitley said India decided to join the bank on the cumulative basis of the economic considerations and geo-political factors.
“We assessed it,” he said in response to a question.
“Probably on June 29, I would be going to China for the signing ceremony, for India officially joining the Bank itself. India will be the second largest shareholder of the bank after China,” he said.
“We do believe that these new institutions. This bank or the BRICs Bank…these institutions are all coming up…the analysis in India has been the reforms within World Bank and the International Monetary Fund has prolonged a bit too long. As a result of which these alternative institutions are coming up,” Jaitley said.