Capital remaining for banks is ‘sufficient’: Govt.

Capital remaining for banks is ‘sufficient’: Govt.

News:

1. The government has indicated that it may not increase the capital allocation to public sector banks.

Important Facts:

1. Public sector banks has witness huge loss in the fourth quarter of 2017-18.
2. The government will not increase the capital allocation beyond the already sanction amount in budget 2017-18.
3. The government had announced a ₹2.11 lakh crore capitalisation plan for the public sector banks for two years, including ₹1.35 lakh crore via recapitalisation bonds in the previous year.
4. The stricter norms on bad loans has resulted in loss by banks last quarter

• State Bank of India  reported a loss of ₹7,718 crore
• Punjab National Bank  reported a loss of ₹13,400 crore

1. The Finance Ministry is planning to rate public sector banks based on their performance from the next financial year and will make the rating available on public domain.
2. With regard to the vacant post of CEO in three public sector banks, Bank Board Bureau has stared the process of selecting the candidates.
3. The Finance Ministry directed all the banks who were facing restrictions under the prompt corrective action framework of RBI to come out with a specific plan for the future including:

• Business strategy of bank
• The Sale of non-core assets
• Capital requirement.