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  1. Bank recap: No free giveaways; government to monitor all loans above Rs 250 crore to check NPAs

Bank recap: No free giveaways; government to monitor all loans above Rs 250 crore to check NPAs

As the government plans to infuse Rs 2.11 lakh crore capital as part of the massive bank recapitalisation plan, it will come with terms and conditions, that is, 6-point reforms to be undertaken by the 21 public sector banks in coming days to bring down NPAs, while government will monitor all loans above Rs 250 crore.

By: | Updated: January 24, 2018 5:19 PM
The Finance Ministry on Wednesday said that the government will now put loans above Rs 250 crore under specialised monitoring. (Image: Reuters)

The Finance Ministry on Wednesday said that the government will now put loans above Rs 250 crore under specialised monitoring, as part of bank reforms after the recapitalisation plan. Finance Secretary Rajiv Kumar laid down 6-point-reform measures for the Public Sector Banks (PSBs), which will be getting capital from the government under the bank recapitalisation plan.

He said that there were delays due to a large number of banks forming a part of the consortium, hence, the government is planning to limit banks with minimum 10% of exposure only to become a part of the consortium. “This will bring down the number of banks in the consortium to just 6-7,” Rajiv Kumar added.

In October last year, the Union Cabinet approved an unprecedented Rs 2.11 lakh crore for recapitalisation of banks over the next two years in a bid to clean banks’ books and revive investment in a slowing economy. “Banks need to reposition themselves to achieve the dream of new India,” Rajiv Kumar said, adding that they need to support MSMEs that generate employment.

The government earlier this month sought parliamentary nod for additional Rs 80,000 crore bonds for the PSBs which are sitting on a pile of Rs 9.5 lakh crore bad loans and approved a proposal for infusion of Rs 7,577 crore in 6 weak PSBs. According to CNBC-TV18, Arun Jaitley may choose the Budget presentation day, February 1, to announce bank merger proposals.

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