Recapitalisation plan for public sector banks
On one hand our Government says that, Macro economic fundamentals are strong and GDP growth is poised for a take-off with the economy turning around. On the other hand the Government announced today (24/10/2017) an "unprecedented" infusion of Rs. 2.11 lakh crore in public sector banks to boost lending.
There was a great infusion of funds into PSU Banks, post demonetization and Banks didn't know, whom to lend that money. Therefore, it is difficult to understand, which way this "Recapitalization" infusion is going to help PSU Banks.
Another question arises, if economy is on the right track and fundamentals are strong, what needed this kind of huge fund infusion to PSU Banks to revive economy.
A news report says, between 2014-15 and 2017-18, banks have made provisions of over Rs 3 lakh crore, more than 10 times the amount made in the preceding 10 years.
At a press conference held by Finance Minister Mr. Arun Jaitley, Banking Secretary Rajiv Kumar said the government will infuse Rs 1.35 lakh crore through recapitalisation bonds and Rs 76,000 crore through budgetary support and market raising.
The move comes following a 2015 announcement in which the government had sanctioned a Rs 70,000-crore capital infusion under the Indradhanush banking reform scheme, 80 percent of which has already been paid out.
Mr. Jaitley said that banks lent "indiscriminately" between 2008 and 2014, when gross advances increased Rs 34 lakh crore. A "large part" of this indiscriminate lending has now turned as non-performing assets (NPAs), he added.
Another question arises, is this infusion indirectly offsetting "Loan Waivers" announced by political parties in different states and NPAs. more
There was a great infusion of funds into PSU Banks, post demonetization and Banks didn't know, whom to lend that money. Therefore, it is difficult to understand, which way this "Recapitalization" infusion is going to help PSU Banks.
Another question arises, if economy is on the right track and fundamentals are strong, what needed this kind of huge fund infusion to PSU Banks to revive economy.
A news report says, between 2014-15 and 2017-18, banks have made provisions of over Rs 3 lakh crore, more than 10 times the amount made in the preceding 10 years.
At a press conference held by Finance Minister Mr. Arun Jaitley, Banking Secretary Rajiv Kumar said the government will infuse Rs 1.35 lakh crore through recapitalisation bonds and Rs 76,000 crore through budgetary support and market raising.
The move comes following a 2015 announcement in which the government had sanctioned a Rs 70,000-crore capital infusion under the Indradhanush banking reform scheme, 80 percent of which has already been paid out.
Mr. Jaitley said that banks lent "indiscriminately" between 2008 and 2014, when gross advances increased Rs 34 lakh crore. A "large part" of this indiscriminate lending has now turned as non-performing assets (NPAs), he added.
Another question arises, is this infusion indirectly offsetting "Loan Waivers" announced by political parties in different states and NPAs. more
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Recapitalisation does not mean that capital inducted for lending purposes. As per norms of the RBI, every bank has to always maintain certain percent of their banking business as capital, which is an important parameter in deciding the health. Capital is faded away on account of writing off of bad loans in large scale and the question of recapitalisation arises. As of now most of the banks have enough funds to lend and in the event of any necessity they are permitted to borrow from RBI at concessional interest rates to continue their lending activities. Whatever the finance minister claims now does not speaks out the truth in entirety. Its the government which insists all the PSU Banks to indiscriminately lend under various government schemes without security and even without giving enough time to conduct survey and scrutinise each & every case. Such schemes used to be under target systems and the district collectors are made the coordinators and responsible to ensure achievement of all such targets within given time. In turn, the collectors do not leave any stones unturned to pressurise the poor bank managers to lend even if the cases do not merit for lending. The situation is encashed by many opportunists in their favours and the ultimate result is 'becoming of such loans APAs.' more
Nov 09
The so-called recapitalisation involves no infusion of funds into Banks. On the other hand, it involves only book entries for credit to the Capial Account of the Government to the debit of Government Securities A/c in the Bank supported by issue of Government Securities by the Government. more
Nov 10
Our mindset need to be changed. In earlier days - it used to be Daridra Narayan Seba by the effluents. The same is getting modernised to Rich Kuber Seba by the by the masses. We should be grateful to all who are kindly accepting/ receiving our Seba and also to those who are facilitating to transmit the Seba. Our salvation is assured. more
Oct 26
The NPA's have increased over the years only because of the mistakes of the bank employees n senior officials. No body in the ministry of finance bothered about these loans. The bank give loans to just complete their targets given to them but targets were given to bank employees for its recovery. The amounts are given for the purchase of the machinery/ equipment but control was kept on its price. The bank should get the bids opened in their presence, the stocks of finished goods must be checked in the presence of three four employees of the bank including the senior managerial staff. It should be randomly checked thoroughly other wise you will not be able to recover this month. It is only done with the knowledge of the bank employees n the senior manager of the bank. NPA's have increased due to the convinance of the bank employees senior of junior and the bank branch official otherwise this can not happen. Ou industrialist are also take advantage of the situation. The government should confiscate all the properties of the industrialist moveable and immoveable first and then take other measures. more
Oct 25
The fact is that we have Indiscipline Democracy or in other words it is Mob Democracy. It all started with the Government selling jobs for money. These bureaucrats and public servants recovered the money by taking bribes from industrialists and businessmen. These businessmen and industrialists borrowed money from banks as well as subsidies from the Government and they never put up the industries or became sick and closed them and Bank lending became NPA, then there is One Time Settlement Schemes. The system deteriorated and we slowly loved Money more than our Nation. The corruption led to the citizens hate our Nation, opportunists, selfish and also Brain drain. There is more politics than Patriotism. Politics became hereditary business and lost governance. Multi party system in the name of Democracy lost Patriotism. Politicians created more and more institutions to satisfy the workers. Coalition parties started blackmailing. Indian Democracy gave only Rights to the Citizens and No Duties. More and more rights are being given. The PM has just begun the process of cleaning up and it is not an easy task and will take much time.till then we have to sacrifice for the future of our Nation and the children Hope better sense will prevail and the PM will get one more term to bring the Nation of right track and take off and regain our lost glory. more
Oct 25
Another Rs. 2.11 Lakh Crores bailout package to PSU Banks announced yesterday! more
Oct 25
If the government is sincere , they should have proper mechanism to monitor and control, from the bottom of the pyramid. Allotting money at the top will not work at all. Just by sanctioning the money /budget from the ministry and keeping the hands crossed telling that my job is over should not be the attitude. It is our own money getting disbursed. How this is being implemented is the question mark.Can anybody answer ? Not possible. more
Oct 25
No Sir. It is other way round. Industry does Political funding, in turn they obtain huge loans from PSU Banks which they don't pay and turns into bad debt and then, with Tax Payers money, a bailout package is given to Banks by the ruling Government, to offset NPAs.
In other words, both India Inc. and political parties are funded by Tax Payer's money, directly or indirectly. We like it or don't, it is the real picture. more
In other words, both India Inc. and political parties are funded by Tax Payer's money, directly or indirectly. We like it or don't, it is the real picture. more
Oct 25
