On January 24, 2018, Government provided details about the recapitalisation plan for Public Sector Banks (PSBs) that was announced in October 2017. The details were provided at a press conference held by Finance Minister Arun Jaitley, Finance Secretary Hasmukh Adhia, Economic Affairs Secretary Subhash Garg and Financial Services Secretary Rajiv Kumar.
Information related to PSB recapitalisation plan:
In a bid to revise growth of PSBs, Government will infuse Rs. 88139 crore capital in 20 public sector banks (PSBs) before March 31, 2018.
- Out of this amount, 80000 crore will be raised through recapitalisation bonds and Rs. 8139 crore will come in the form of budgetary support.
- IDBI Bank will get the highest infusion – Rs 10610 crore.
- These bonds would be issued in six tranches, will have a maturity period of 10-15 years and would be priced at 8%.
- Along with this announcement, Government also unveiled ‘Enhanced Access and Service Excellence (EASE)’, a six-fold roadmap for reforms in PSBs.
- The six pillars of EASE reform plan comprise customer responsiveness, credit off take, PSBs as Udyami Mitra, responsible banking, deepening financial inclusion and digitalisation, and developing personnel.
- An independent agency will be hired to conduct a public survey of the PSBs’ performance on each of the pillars of EASE reform pla The results of the survey would be published annually.
- Phased capital infusion under this plan would be dependent on individual banks’ performance.
- Main objective behind recapitalisation plan is to help PSBs to cope up with the problem of bad debts and revive credit growth.
Top 5 recipients under PSB recapitalisation plan:
|IDBI Bank||Rs. 10610 crore|
|Bank of India||Rs. 9232 crore|
|State Bank of India||Rs. 8800 crore|
|UCO Bank||Rs. 6507 crore|
|Punjab National Bank||Rs. 5473 crore|