Rs 10,000-Crore Bank Recapitalisation In FY18 Sufficient: Banks Board Bureau Chief
The government has budgeted Rs 10,000 crore in FY18 budget to infuse funds in PSU banks.
Bank recapitalisation of Rs 10,000 crore for the next financial year will be sufficient as state-owned lenders will have the option of a rights issue, Bank Boards Bureau Chairman Vinod Rai said on Thursday.
“It (bank recapitalisation) should be sufficient, government will probably go in for a rights issue as well, so with that Rs 10,000 crore they will be able leverage more from the market," Rai told reporters in New Delhi.
The government has budgeted Rs 10,000 crore in the Union Budget 2017-18 as part of its ‘Indradhanush’ plan to infuse funds in state-owned banks to meet capital requirements under the Basel III norms.
The Banks Board Bureau started functioning in April, 2016 with a mandate to revamp state-run banks. The bureau was an attempt to separate the functioning of these banks from the government by creating an entity that would act as a link between the two. It was tasked with making appointments in state-run banks as well as coming up with the right fit for possible mergers.
Rai said a proposal to incentivise bank employees by introducing employees stock options (ESOP), and variable pay structure was sent to the government in January, and is still under examination.
On appointment of Indian Overseas Bank Ltd.’s chairman and managing director, Rai said that the board has already suggested the name and the Appointments Committee of Cabinet will soon name the eligible candidate. Indian Overseas Bank’s top post has remained vacant for over two years now.
