Fund infusion to help maintain capital adequacy of banks says Rajiv Kumar

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New Delhi | Published: October 25, 2017 11:44:08 PM

The unprecedented Rs 2.11 lakh crore capital infusion road map announced by the government will boost capital adequacy of all public sector banks, Financial Services Secretary Rajiv Kumar said.

Financial Services Secretary , Rajiv Kumar, NPA, public sector banks, Arun Jaitley, recapitalisation bonds, finance ministerKumar further said that bond issuance would be front loaded and would be spread over two fiscal. (Twitter)

The unprecedented Rs 2.11 lakh crore capital infusion road map announced by the government will boost capital adequacy of all public sector banks, Financial Services Secretary Rajiv Kumar said. “There will be a differential approach. The capital adequacy of all the banks will be maintained and thereafter it would be the performance and the potential based,” he said here. Yesterday, the government unveiled Rs 2.11 lakh crore two-year road map for strengthening NPA-hit public sector banks, which include re-capitalisation bonds, budgetary support, and equity dilution.

Kumar further said that bond issuance would be front loaded and would be spread over two fiscal. The capital infusion, Finance Minister Arun Jaitley said, will be accompanied by reforms to enable the state-owned banks to play major role in the financial system. Jaitley said the details of the recapitalisation bonds would be determined in the due course. The programme entails mobilisation of capital, with maximum allocation in the current year through budgetary provisions of Rs 18,139 crore, and recapitalisation bonds to the tune of Rs 1.35 lakh crore over the next two years.

The balance would be raised by banks from the market by diluting government equity. The government’s equity dilution would help banks to raise about Rs 58,000 crore. The government equity, as per the current policy, can come down to 52 per cent in state-owned banks.

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