{"id":31776,"date":"2018-10-29T11:11:37","date_gmt":"2018-10-29T05:41:37","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=31776"},"modified":"2018-10-29T11:11:37","modified_gmt":"2018-10-29T05:41:37","slug":"govt-unveils-2-1-lakh-crore-bank-recapitalisation-plan","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/govt-unveils-2-1-lakh-crore-bank-recapitalisation-plan\/","title":{"rendered":"Govt. unveils 2.1 lakh crore bank recapitalisation plan"},"content":{"rendered":"<p><a href=\"http:\/\/www.businesstoday.in\/current\/policy\/arun-jaitley-bank-recapitalisation-reform-plan-capital-infusion-rs-88139-crore-in-psbs-in-fy18\/story\/268773.html\"><span style=\"font-weight: 400;\">Govt. unveils 2.1 lakh crore bank recapitalisation plan<\/span><\/a><\/p>\n<p><b>Context:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Govt. unveils details of recapitalisation plan for public sector banks<\/span><\/li>\n<\/ul>\n<p><b>Introduction:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government has moved proposal to infuse additional grant of Rs 88,139 crore &#8211; Rs 80,000 crore through Recap Bonds and Rs 8,139 crore as budgetary support &#8211; for 2018 under the public sector banks recapitalisation plan.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> \u00a0The government last year announced the capital infusion plan to pump in Rs 2.1 lakh crore in PSBs &#8211; burdened under huge Non-Performing Assets (NPA) &#8211; in the course of two years (FY18 and FY19). <\/span><\/li>\n<\/ul>\n<p><b>Bank\u2019s recapitalization:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> The recapitalisation initiative will be accompanied by a strong reforms package across six themes incorporating 30 action points.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Major agendas under the action plan are <\/span><b>Enhanced Access and Service Excellence (EASE)<\/b><span style=\"font-weight: 400;\"> focusing on six themes of customer responsiveness, responsible banking, credit off-take, PSBs as Udyami Mitra, deepening financial inclusion and digitalisation and developing personnel for brand PSB. \u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> A strict watch will be kept on the PSBs&#8217; lending and recovery systems to ensure clean consortium loans with only 10 per cent exposure.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The PSBs will have to keep in mind they follow a rigorous process for corporate lending and make post-sanction follow-ups in loans above Rs 250 crore.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">In addition to flagging loan defaults in time, the PSBs will initiate stringent loan recovery methods.<\/span><\/li>\n<\/ul>\n<p><b>Why does recapitalizing PSBs a more effective remedy?<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">With India\u2019s economic growth faltering in the last couple of years, the government has been casting about for ways to galvanise the economy like Demonetisation and introduction of GST.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> Its economic benefits will be long in coming while the short-term disruption has been very real.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Recapitalising public sector banks (PSBs) and <\/span><span style=\"font-weight: 400;\">enhancing the flow of credit is critical for revitalising India\u2019s growth momentum<\/span><span style=\"font-weight: 400;\"> at a time when the global economy is recovering.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The move is vital for the slowing economy as private investments remain elusive in the face of the <\/span><span style=\"font-weight: 400;\">\u201ctwin-balance sheet problem<\/span><span style=\"font-weight: 400;\">\u201d worrying corporate India and public sector banks reflected in slow bank credit growth.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The PSB\u2019s are reeling under the huge burden of <\/span><b>Non-performing Assets (NPAs)<\/b><\/li>\n<\/ul>\n<p><b>Measures:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government has a prime responsibility of keeping the PSBs in good health.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"> The government&#8217;s job is to create an institutional mechanism to ensure what happened in past is not repeated.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Steps needed to ensure that banks follow the highest standard of governance in future.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Bank\u2019s recapitalization is the best exercise in the extensive reform plan.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The necessary compliance standards need to follow to<\/span> <span style=\"font-weight: 400;\">make the banks strong, professional and accountable institutions.<\/span><\/li>\n<\/ul>\n<p><b>UdyanMitra decision:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The government has put a special focus on the Micro Small and Medium Sector by providing credit support and easy application loan facility.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">On UdyanMitra, decision on a loan application will be taken in 15 days, and GST-registered MSMEs will be able to avail enhanced working capital.<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Govt. unveils 2.1 lakh crore bank recapitalisation plan Context: Govt. unveils details of recapitalisation plan for public sector banks Introduction: The government has moved proposal to infuse additional grant of Rs 88,139 crore &#8211; Rs 80,000 crore through Recap Bonds and Rs 8,139 crore as budgetary support &#8211; for 2018 under the public sector banks&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/govt-unveils-2-1-lakh-crore-bank-recapitalisation-plan\/\">Continue reading <span class=\"screen-reader-text\">Govt. unveils 2.1 lakh crore bank recapitalisation plan<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-31776","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704664506},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31776","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=31776"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/31776\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=31776"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=31776"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=31776"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}