FM assures of strengthening fragile public sector banks
In a move supporting Indian banking sector, the Union Finance Minister Arun Jaitley on Wednesday assured of strengthening Public Sector Banks (PSB) and clearing worries over Non Performing Assets (NPAs). Stating that there was no ground to panic over NPAs, the finance minister said the government's first objective was to strengthen fragile public sector banks (PSBs). “Consolidation of weaker state-run banks with stronger ones will be the next step if some of the lenders continue to remain fragile, despite steps to strengthen them,” he said, speaking at Indian Summit 2015, organised by The Economist magazine in New Delhi on Wednesday. Jaitley also highlighted key measures to be taken by the government to strengthen PSBs, which include capital infusion and hiring of professionals including from private sector. Bringing down government stakes in these banks to 52% would further augment their capital, he added. On NPAs, the minister said, "It (banking system) is a matter of concern. It's not the main worry. There is no ground to panic. The banking system that we inherited primarily, the PSBs, was actually very challenging.” "When the economy slowed down, and when you inherit the economy at sub-5 % level, it has an impact on the banking system as well... Primarily three or four sectors... (have) added to the NPAs of PSBs," he said. NPA was mainly in sectors like highways, steel, state discoms and textiles, the Minister added. Gross NPAs of the state-run banks stood at 5.2% at the end of March quarter, compared with 5.63% in December. Out of Rs.1.80 lakh crore capital requirement as estimated by the Finance Ministry for state-run banks, the government would be providing Rs.70,000 crore-Rs.25,000 crore each in the current and the next fiscal, and Rs.10,000 crore each in 2017-18 and 2018-19 fiscal.
September 09, 2015 | 4:45pm IST.
to success.