Budget 2019: Banks get more than expected, says India’s largest bank’s head

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July 5, 2019 7:31 PM

India Budget 2019-20: Finance Minister Nirmala Sitharaman today announced bank recapitalisation worth Rs 70,000 crore for PSU banks for the current financial year 2019-20, which, the largest banker in India said is more than what the market was expecting.

Budget 2019-20 India: The government today announced a bank recapitalisation of Rs 70,000 crore to the PSU Banks in its budget for the financial year 2019-20

India Union Budget 2019: Finance Minister Nirmala Sitharaman today announced bank recapitalisation worth Rs 70,000 crore for PSU banks for the current financial year 2019-20, which, the largest banker in India said is more than what the market was expecting. According to Rajnish Kumar, Chairman, State Bank of India, the recapitalisation amount is a little more than the market expectation, which would also be available as growth capital to the PSU (public sector undertaking) banks. However, Rajnish Kumar said that India’s largest lender SBI doesn’t need any capital from the government and it has enough funds for itself.

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“In the last three years, this budgetary support is the highest and on top of it, banks themselves were to raise about Rs 60,000 crores. As a combination of this and bringing out the banks out of prompt corrective action or PCA, this amount aligns with what as required and the estimated amount for recapitalisation,” Rajnish Kumar said in an interaction with ET Now. He said the market had expected only Rs 40,000 crore as a capital infusion into the PSU Banks in the current fiscal.

The more-than-expected bank recap amount would provide growth capital for the PSU Banks which would in turn help in giving a boost to the lending by PSU banks, according to Rajnish Kumar. Finance Minister Nirmala Sitharaman said during Budget presentation that the government would provide a one-time six-month partial guarantee of Rs 1 lakh crore to PSU banks for purchasing consolidated high-rated pooled assets of financially-sound NBFCs. Rajnish Kumar said the move would enable credit flow to the better-managed NBFCs. According to him, the government’s move to transfer the regulation of Housing Finance Companies or HFCs to the RBI from the National Housing Bank is also a good move as the latter’s capability is much higher than the NHB.

In the last three years, the government has pumped in Rs 2.2 lakh crore, besides Rs 0.66 lakh crore which the PSU banks raised by themselves. The SBI Chairman said SBI doesn’t need any government capital. Recently the bank’s board had approved the sale of the Basel III-compliant debt instrument in the year to March 31 in a bid to augment its capital ratio.

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