Union Budget 2019 India: Finance Minister Nirmala Sitharaman on Friday proposed an allocation of Rs 70,000 crore for public sector banks (PSBs) so as to improve the rate of credit in the economy.
Union Budget 2019 India: Finance Minister Nirmala Sitharaman on Friday proposed an allocation of Rs 70,000 crore for public sector banks (PSBs) so as to improve the rate of credit in the economy. Following a review initiated by the Reserve Bank of India (RBI) in 2015, the first term of the Narendra Modi government infused record amounts of capital into PSU banks post an asset quality review started by the central bank in 2015. The review resulted in rise in reported bad assets and called for a surge in provisions.
Finance Minister Nirmala Sitharaman had recently said in a response to a question in Parliament on June 24: “Over the last five financial years, PSBs have been recapitalised to the extent of Rs 3.19 lakh crore, with infusion of Rs. 2.5 lakh crore by the government and mobilisation of over Rs 66,000 crore by PSBs themselves,”
Presenting her maiden budget, she also said that the financial gains from cleaning of banking system is clearly visible since the non-performing assets (NPAs) were reduced by over Rs 1 lakh crore last year. The record recovery of Rs 4 lakh crore could also be made possible due to Insolvency and Bankruptcy Code (IBC), she added.
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The budget also said that the fundamentally sound non-banking financial companies (NBFCs) will keep getting funding from banks. The budget also announced to provide 1-time six month partial credit guarantee to buy pooled assets of sound NBFCs. The government may also look to allow NBFCs to directly participate in TReDs, the finance minister added. The regulation of the housing finance companies has been proposed to move from the National Housing Bank (NHB) to the Reserve Bank of India (RBI).
Finance Minister Nirmala Sitharaman on Thursday presented the Economic Survey in Parliament had projected GDP (gross domestic product) growth at 7 per cent in the 2019-20 fiscal year from an estimated 6.8 per cent in the previous year.