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    Government to infuse Rs 20,000 crore in India's state-run banks

    Synopsis

    In April, Reuters reported that New Delhi had assured state banks that it is ready to provide capital support as the coronavirus pandemic may lead to a surge in bad loans as economic growth slows. The government has already pumped in Rs 3.5 lakh crore in the last five years to rescue its banks.

    Agencies
    The government has already pumped in 3.5 trillion rupees in the last five years to rescue its banks.
    NEW DELHI: The government on Monday sought Parliament's approval for infusing Rs 20,000 crore in public sector banks in the current financial year to meet regulatory requirements.

    This is part of the first batch of Supplementary Demands for Grants for 2020-21 moved by Finance Minister Nirmala Sitharaman in the Lok Sabha.

    In all, the government has sought Parliament's nod for additional spending of Rs 2.35 lakh crore, which includes a cash outgo of Rs 1.66 lakh crore, primarily to meet expenses for combating the COVID-19 pandemic.

    "For meeting expenditure towards recapitalisation of Public Sector Banks through issue of Government Securities" the government has asked for Parliament's authorisation of Rs 20,000 crore, as per a document.

    In 2019-20, the government proposed to make Rs 70,000 crore capital infusion into the Public Sector Banks (PSBs) to boost credit for a strong impetus to the economy.

    However, the government refrained from committing any capital in the Budget 2020-21 for the PSBs, hoping that the lenders will raise funds from the market depending on the requirements

    In the last financial year, Punjab National Bank got Rs 16,091 crore, Union Bank of India received Rs 11,768 crore while Canara Bank and Indian Bank got Rs 6,571 crore and Rs 2,534 crore, respectively.

    Allahabad Bank received Rs 2,153 crore, United Bank of India got 1,666 crore and Andhra Bank received Rs 200 crore. These three lenders have been merged with various PSBs.

    Besides, Bank of Baroda got a capital infusion of Rs 7,000 crore, Indian Overseas Bank received Rs 4,360 crore and UCO Bank got Rs 2,142 crore. Punjab & Sind Bank received Rs 787 crore and Central Bank of India got Rs 3,353 crore.

    In addition, LIC-controlled IDBI Bank received additional capital of Rs 4,557 crore through the supplementary demands for grants.

    The government has also sought Rs 1,232 crore as subsidy to Small Industries Development Bank of India (SIDBI) on interest subvention of 2 per cent on prompt repayment of Shishu Loans extended under Pradhan Mantri Mudra Yojana (PMMY).

    Further, Sitharaman has sought approval of Parliament of Rs 4,000 crore for meeting an additional expenditure towards Grants-in-Aid General to National Credit Guarantee Trustee Company Limited (NCGTC) for the Guarantee Emergency Credit Line (GECL) facility to eligible MSME borrowers.

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    13 Comments on this Story

    Chandrahash Rushi37 days ago
    So another Rs 20000 Crores for the mega Rich borrowers for embazzelemnet & making the Bansk further weak. Jai Ho same situation since 1971
    np41 days ago
    Good decision of govt by giving help to its banks.But govt is not rescueing loss-making psu banks from NPAs which is a concern of people who believes in welfare state concept.Pfivatisation a curse and disease should be stopped.Mrs Indira Gandhi nationalised banks to let people progress and to create nationalism.Only requirement is to control banks because officials in cartel with looters have increased bad loans.Govt should merge all loss making banks and make them sound to serve people of India.strict vigilance required for banks and auditings of psu banks must be brought under CAG.Peoples faith in banking system needs to be restored by investigations by ED &CVC and punish the defaulters and corporates lootings of our national assets
    Al Fox41 days ago
    Private all national banks. Govt. has no business being in any business. Corrupt bank officials are misusing Govt. money and creating NPA - Non Performing Assets. Privatize them and throw these non-competent workers to the mercy of Market economy.
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