Pending FY17 Recapitalisation Of Banks May Be Carried Forward Next Year 

The government is likely to carry forward the remaining amount of Rs 2,085 crore from its recapitalisation target for financial year (FY) 2016-17 for state-owned banks to the next financial year, a senior finance ministry official said on Monday.

The government had infused Rs 22,915 crore in 13 public sector banks out of the budgeted Rs 25,000 crore in the current financial year. This is a part of the government’s ‘Indradhanush’ plan to infuse funds in state-owned banks to meet capital requirements under the Basel III norms.

Pause In PSU Bank Consolidation?

Just days after the Cabinet approved the merger of five associate banks with the country’s largest public sector lender, State Bank of India, the official said the government will not look at further consolidation till the bad loan problem eases.

The merger of small banks with their bigger counterparts in the public sector at their current health, will hinder the performance of the merged entity, he added.

Gross NPAs of public sector banks stood at Rs 6.2 lakh crore in the quarter-ended December, compared with Rs 3.06 lakh crore in September.

“We see opportunities to strengthen our CPSEs (Central Public Sector Enterprises) through consolidation, mergers and acquisitions. By these methods, the CPSEs can be integrated across the value chain of an industry. It will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders,” Finance Minister Arun Jaitley had said in his Budget speech.