Govt. move to enhance bank recapitalisation outlay to Rs 1,06,000 cr

Speed Post News Network

New Delhi : The Government on December 20, 2018, moved proposal in Parliament for enhanced bank recapitalisation outlay from Rs 65,000 crore to Rs 1,06,000 crore in the current financial year to propel economic growth, cementing India’s position as the fastest growing economy of the world. This would enable infusion of over Rs 83,000 crore in the coming few months in Public Sector Banks (PSBs).

The enhanced provision is aimed at: (1)  Meeting regulatory capital norms (2)  Providing capital to better-performing PCA Banks to achieve 9% Capital to Risk-weighted Asset Ratio (CRAR), 1.875% Capital Conservation Buffer, and the 6% Net NPA threshold, facilitating them to come out of PCA (3)  Facilitating non-PCA banks that are in breach of some PCA thresholds to not be in breach and (4)  Strengthen amalgamating banks by providing regulatory and growth capital

Following comprehensive clean-up of the banking system under Government’s 4R’s approach of Recognition, Resolution, Recapitalisation and Reforms, the envisaged recapitalisation would equip banks financially at levels higher than the global norms. In this connection, it is pertinent to note that India’s capital norms for banks are 1% higher than the norms recommended under the global Basel-III framework, according to a PIB release.