Financial services secretary Rajeev Kumar has asked chiefs of these banks to implement reforms announced earlier this week and support economic growth through improved and prudent lending.
With the government revealing details of an unprecedented capital infusion into public-sector banks (PSBs), financial services secretary Rajeev Kumar has asked chiefs of these banks to implement reforms announced earlier this week and support economic growth through improved and prudent lending. “It’s incumbent on PSBs that trust reposed by the government translates into economic returns for the country. Holistic and wide-ranging reforms, therefore, need to take place alongside, so that this capital is effectively utilised towards faster economic growth,” Kumar said in a letter to the chiefs of PSBs. Around a half of PSBs are already under prompt corrective action (PCA) initiated by the Reserve Bank Of India (RBI). The finance ministry this week said while non-PCA banks, including State Bank of India and Punjab National Bank, will get a total of Rs 35,28 crore growth capital this fiscal from the government, stressed banks that are under the PCA, led by IDBI Bank, will get a total of Rs 52,311 crore.
Earlier this month, the government sought Parliamentary approval to issue the recapitalisation bonds of Rs 80,000 crore this fiscal. As per the plan, of the total recapitalisation package of Rs 2.11 lakh crore over two years through FY19, the government will infuse as much as Rs 1.35 lakh crore through such bonds. The government has also said it would release Rs 8,139 crore this fiscal, as part of its budgetary support under the Indradhanush plan. Kumar said the reforms agenda for PSBs, called Ease of Access Service Excellence (EASE), is based on the recommendations made by whole-time directors and other senior executives of various PSBs in November 2017. “It encapsulates a synergistic approach to ensuring prudential and clean lending, better customer service, enhanced credit availability, focus on MSMEs and better governance,” Kumar said. “EASE would once again prove that the orientation of PSBs to meeting customer needs remains strong.” Earlier this month, finance minister Arun Jaitley had also asked stressed PSBs to get their act together and get back to shape at the earliest so that they can support growth through improved lending.