Budget 2018: Banking sector’s 3 key demands from Arun Jaitley

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Updated: Jan 25, 2018 2:14 PM

Budget 2018: The country’s banking sector has come out with its major demands ahead of Budget 2018. The latest round of the Ficci-IBA survey drew responses from 19 public sector, private and foreign banks representing 59 per cent of the banking industry by asset size.

Budget 2018: The country’s banking sector has come out with its major demands ahead of Budget. Budget 2018: The country’s banking sector has come out with its major demands ahead of Budget.

Budget 2018: The country’s banking sector has come out with its major demands ahead of Budget 2018. The latest round of the Ficci-IBA survey drew responses from 19 public sector, private and foreign banks representing 59 per cent of the banking industry by asset size. The banking sector has majorly demanded full tax deduction on the NPA provisioning; reduction in corporate tax rate; and accelerated investments in infrastructure sector in budget 2018. 58 percent of the respondent banks reported a rise in NPAs, significantly lower than 80 percent in the previous round, survey said. Infrastructure, metals and engineering goods were key contributors to the bad debt. However, only 28 per cent banks reported a rise in the number of requests for the restructuring of loans as compared to 40 per cent in the previous round.

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“Most of the responding banks have suggested reduction in corporate tax rate from 30 per cent to 25 per cent, lowering of MAT rate to 15 per cent and enhancing tax deductions and exemptions for individuals. This should boost credit demand at both corporate and retail level,” said Ficci on the report. The survey was carried out for the period July to December 2017.

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With an aim to provide fillip for Public Sector Banks (PSBs) in the country, the Modi government will infuse a total of around Rs 1 lakh crore by March-end. This staggering amount comprises of Rs 80,000 crore which will be infused through recapitalisation bonds. Apart from this Rs 8,139 crore will be infused through gross budgetary support and Rs 10,312 crore of funds raised from the market. An announcement was made in this regard yesterday. The central government had come up with a reforms roadmap for these banks.

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It has been learnt that eleven weak banks are to be given a total of Rs 52,311 crore to maintain their minimum capital requirement. Nine strong banks will get Rs 35,828 crore.The eleven weak banks are currently under the RBI’s Prompt Corrective Action (PCA)0. This plan kicks in when banks breach regulatory norms on issues such as minimum capital, amount of non-performing assets and return on assets. The central bank enforces these guidelines to ensure that banks do not go bust and follow prompt measures to put their house in order. IDBI Bank, which has a Gross Non Performing Assets (NPA) ratio of 24.98 percent, will receive the highest capital infusion of Rs 10,610 crore, followed by Bank of India getting Rs 9,232 crore and State Bank of India getting Rs 8,800 crore. However, it’s still to be seen if Arun Jaitley obliges to the demands of banking sector in Budget 2018.

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