Government to infuse Rs 2.11 lakh crore into PSU banks

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The government has announced an unprecedented Rs 2, 11,000 crore plan for recapitalisation of the PSU (public sector undertaking) banks in a bid to push growth and create jobs. The Cabinet that met earlier in the day cleared the package. The Rs 2.11 lakh crore package will be spread over two years, Finance Minister Arun Jaitley said.


While Rs 1, 35, 00 crore will be in the form of front-loaded recapitalisation bonds, the remaining Rs 76,000 crore will be in the form of budgetary support. The nature of the bonds and details of the bonds would be made public during course of time, he said.


While saying more banking reforms will be announced in the days to come+, Jaitley was critical of banks being indiscriminate in their lending in the past and brushing the real NPA (non-performing assets) issue under the carpet for a long time.


Non-performing assets of banks have increased from Rs 2.75 lakh in March 2015 to Rs 7.33 crore as on June 2017.


“We believed that PSU banks at one stage did indiscriminate lending. From the lending that happened between 2008-2014, there is a big chunk which is now NPA. The NPAs were kept below the carpet,” Jaitley said.


After an asset quality review+ by the government, the “real situation” of the banks was revealed. The banking sector has been neck-deep with asset quality worries. As per the latest data available, 39 listed banks have NPAs running up to a whopping Rs 8.35 lakh crore.


The finance minister said banks would get Rs 18,000 crore under the Indradhanush plan.

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