Government Open To Reviewing Capital Infusion Plan In Public Sector Banks
Government will infuse Rs 70,000 crore for four financial years in public sector banks.
The government may review the Indradhanush scheme or even come up with a new plan for capital infusion in public sector banks, if circumstances demand so, Finance Secretary Ashok Lavasa told BloombergQuint in an interview.
…Whatever obligations the government undertook as a part of the first (Indradhanush) plan, they are being fulfilled in the way they were projected. So, if the circumstances change now which require reconsideration or looking at a new plan for recapitalisation, I think that is something we should look at, as it comes up.Ashok Lavasa, Finance Secretary
As per the Indradhanush scheme, approved in 2015, the government will infuse Rs 70,000 crore for four financial years starting 2015-16 in public sector banks to meet Basel-III norms. It infused Rs 25,000 crore each in 2015-16 and 2016-17, and plans to provide Rs 10,000 crore each in the following two years.
Lavasa said that a decision has not been taken yet on deferring Basel-III norms for banks, but there is a point of view that Indian banking industry should get some more time.
Basel-III norms mandate banks to maintain a minimum capital adequacy ratio of 11.5 percent by March 2019. Of the total, tier-I capital must be 7 percent, with a provision for 2 percent in tier-II capital. Banks must also maintain a capital conservation buffer of 2.5 percent of risk weighted assets.