1. Govt to inject Rs 20,000 cr in PSBs in a month, SBI to get Rs 5,000 cr

Govt to inject Rs 20,000 cr in PSBs in a month, SBI to get Rs 5,000 cr

Government will infuse Rs 20,088 crore into 13 PSU banks within a month's time with country's largest lender SBI cornering a hefty Rs 5,531 crore, Finance Ministry said today.

By: | New Delhi | Updated: August 14, 2015 9:23 PM
Financial Services Secretary Hasmukh Adhia while making a presentation titled Indradhanush -- Plan for Revamp of Public Sector Banks said "the capital infusion will happen within a month". (Reuters)

Financial Services Secretary Hasmukh Adhia while making a presentation titled Indradhanush — Plan for Revamp of Public Sector Banks said “the capital infusion will happen within a month”. (Reuters)

Government will infuse Rs 20,088 crore into 13 PSU banks within a month’s time with country’s largest lender SBI cornering a hefty Rs 5,531 crore, Finance Ministry said today.

Under the allocation plan, Bank of India will get Rs 2,455 crore, IDBI (Rs 2,229 crore), Indian Overseas Bank (Rs 2,009 crore), Bank of Baroda (Rs 1,786 crore), PNB (1,732 crore), Union Bank of India (Rs 1,080 crore), Canara Bank (Rs 947 crore) and Corporation Bank (Rs 857 crore).

Moreover, Dena Bank will get Rs 407 crore, Bank of Maharashtra (Rs 394 crore), Andhra Bank (Rs 378 crore) and Allahabad Bank (Rs 283 crore).

Financial Services Secretary Hasmukh Adhia while making a presentation titled Indradhanush — Plan for Revamp of Public Sector Banks said “the capital infusion will happen within a month”.

The government has already laid out a roadmap for Rs 70,000 crore capital infusion in PSU banks over a period of four years. Of this Rs 25,000 crore each will happen in 2015-16 and 2016-17 and Rs 10,000 crore each in 2017-18 and 2018-19.

Of the Rs 25,000 crore allocated this fiscal, the distribution of Rs 5,000 crore among eight banks would be decided in the fourth quarter after looking at the performance of various banks in the first nine months.

“Eight banks, which did not get any capital in first two tranche will get preference in third tranche,” Adhia said.

The government has estimated capital requirement of PSU banks over four year period at Rs 1.80 lakh crore. Of this, banks would have to raise Rs 1.10 lakh crore from the market.

Adhia said this estimate is based on credit growth rate of 12 per cent for the current year, and 12-15 per cent for next three years depending on the size of the bank.

The Financial Services Secretary said that it is presumed that the emphasis on PSBs financing will reduce over the years by developing a vibrant corporate debt market and greater participation of private sector banks.

“As of now the PSBs are adequately capitalised and meeting the Basel III and RBI norms. However, the Government wants to adequately capitalise all the banks to keep a safe buffer over and above the minimum norms of Basel III,” Adhia said.

Tags: Arun Jaitley
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      Arif Amiri
      Aug 14, 2015 at 11:10 pm
      Good article
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      1. Danendra Jain
        Aug 14, 2015 at 10:09 pm
        Unless and until culture of flattery and bribery is changed and stopped fully, one cannot imagine of any improvement in health of public banks. Willingly or unwillingly, Government has to learn punishing officers and politicians who caused loss to bank due to their ill-motivated decisions in lending or in recruitment of staff or in promotion processes taking place in banks . They will have to give full powers to auditors and inspectors so that they have courage to write truth of all bad accounts and bad officers without fear of any repercussions in their career or personal life due to torturous transfers. Government will have to provide enough manpower and infrastructure to auditors, inspectors, police officials, judges , magistrates, Debt Recovery Tribunals , courts so that they may act timely and honestly. There should not be any delay in punishing bad officials and bad politicians whosoever he or she may be. An environment has to be created in which honest officer can work without any fear of action for their good work. Practice of transferring an officer to take revenge or for not serving personally to bosses has to be stopped. System of Interview which gives ample opportunity to members of Interview board to select or reject any officer as per their whims and fancies in promotion processes has to be dispensed with. Clear message should go in the minds of each employee that if he or she cause loss to bank and in turn to Nation will be taken to task. Only then we can dream of good health of not only bank but all public sector undertakings. Government will have to stop using banks for political purpose. They will have to stop asking banks to earn through non-banking activities like insurance , mutual fund or stock market. Let bankers focus on banking activities only. Banks can earn a few crore in form of commission by selling insurance policies , but during the course of this activities, they ignore taking care of valuable ets worth crore and crores of rupees and thus cause loss to bank to the tune of hundreds and thousands of crores of rupees. There is a proverb in Hindi which says "Gau marker Juta Dan" which translate into English as "Penny Wise Pound Foolish". Due to wrong execution of good policies of the government, mismanagement of manpower, corruption at all levels and inefficient system at all level, health of bank is moving from bad to worse. It is really worrisome. Problem of bad debts in banks is undoubtedly bigger and deep rooted. I doubt whether the government is really serious to deal with it . Government will have to stop window dressing in banks. Bankers are increasing their balance sheet size by window dressing. Lacs of crore or rupees are added in deposits and advances in last few days of each annual or half yearly or quarterly closing. This results in promotion to wrong and bad officials and rejection of good performers. Bankers conceal bad debts by showing artificial recovery or by restructure of bad advance accounts. This window dressing helps some officers to go up the ladder whereas it become curse for some others in career. This bad culture is known to RBI, Finance Ministers and all auditors , but none has courage to pinpoint it and punish to culprit . Window dressing depicts a false picture of bank and helps defaulters in disposing off the bank's ets for their personal advantage
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