The Union Finance Minister has recently said that, with the objective of invigorating the banking system and inciting economic growth, the government has planned to introduce more capital in state-owned banks. The central government had recently unveiled a two-year plan worth a whopping Rs 2.11 lakh crore to support public-sector banks hit by non-performing assets (including recapitalization bonds, budgetary support and equity dilution).
The Union Finance Minister addressed the leaders of state-owned banks about the government’s decision to add more capital from the budget through bonds and equity expansions of banks and that the country will pay to keep the banking system in good condition. The bankers who gathered here were assured of non-interference in commercial transactions by the Union Finance Minister, but were instructed that during the time of making those changes and monetary contributions in order to strengthen the banking system, robust public sector banking is demanded so that the banks’ ability to support growth itself increases.
The Union Finance Minister also said that the banks have taken up the Micro, Small and Medium Enterprises (MSMEs), the sector creating jobs and giving boost to the economy, which has no access to international finance or bond market, as focus areas to support them. The bankers were told that a lot of public money is being spent and money from foreign investment will be flowing in the country. The non-performing assets of public sector banks had increased from Rs 2.78 lakh crores in March, 2015 to Rs 7.33 lakh crores in June, 2017. In the last three years, more than Rs 51000 crores of capital has been invested into PSBs.