Centre announces ₹2,11,000 crore Public Sector Bank capitalisation plan

On Rahul Gandhi terming GST ’Gabbar Singh Tax’, Arun Jaitley says those who are used to 2G, coal scam will have problems paying genuine tax.

Highlights

• Rs. 1.35 lakh crore in capital infusion to be done through recapitalisation bonds
• Rs. 76,000 crore in capital infusion to be drawn from budgetary support
• Capital infusion would be done over the next two fiscals
• Nature of recap bonds, details to be made public soon
• Series of banking reforms to be announced in next few months

Top Developments

 

1. PSB capitalisation plan for Rs. 2,11,000 crore announced
2. Real GDP growth average is 7.5% in the last 3 years, says DEA Secretary Subhash Chandra Garg
3. About 2,000 km of coastal roads to be constructed in Phase I of Bharat Mala, says Finance Secretary Ashok Lavasa
4. Public sector banks have adequate lending capacity now, post demonetisation, says Finance Minister Arun Jaitley
5. Banks to get Rs. 18,000 crore under the Indradhanush plan
6. NPAs increased from Rs. 2.75 lakh crore in March 2015 to Rs. 7.33 lakh crore as on June 2017

Union Finance Minister Arun Jaitley on Tuesday said the Indian economy was on a strong wicket with sound macro-economic fundamentals.

At a press briefing called to detail the state of the economy, he said India had been the fastest growing major economy in the last three years and the attempt was to maintain high growth rate in the coming years. Economic Affairs Secretary S.C. Garg, Finance Secretary Ashok Lavasa and Department of Financial Services Secretary Rajiv Kumar made presentations. 

The major announcement was by Mr. Kumar. He said the Union Cabinet had approved a massive recapitalisation plan for public sector banks (PSBs) worth Rs. 2.11 lakh crore. Of this amount, Rs. 1.55 lakh crore would be raised through recapitalisation bonds. Another Rs. 76,000 crore would be available from budgetary support and raised through market borrowings.

Here are the updates:

5.48 pm: The presser concludes with Mr. Jaitley asking a journalist not to jump to conclusions too soon, but only after registering the full impact of what was said today.

5.45 pm: The road projects announced today under 'Bharat Mala' include the existing projects, observes the Minister. On Rahul Gandhi terming GST ’Gabbar Singh Tax’, he says those who are used to 2G, coal scam will have problems paying genuine tax.

5.40 pm: GST collection is in transition phase. But last three months' collection are consistently raising, he says. Mr. Kumar says there will a differential inclusion on capital according to size and ethos of the banks.

5.35 pm: The huge spending on infrastructure announced today will give a fillip to private sector investment, he says adding it was to set right the lending scenario followed between 2008 and 2014.  “Once you strengthen banks, appetite for their stock will improve.”

5.30 pm: The glide path of the fiscal deficit will continue to be maintained, Mr. Jaitley says. There's no embargo as far as willful defaulters are concerned. No veil of secrecy, he says. Their names can be published, he adds. 

5.15 pm: It's back to Mr. Jaitley. He says the presentations have made it clear that the macro-economic fundamentals are strong.  There’s need to increase public investment. Indiscriminate lending has led to non-performing assets (NPAs), which were kept under the carpet. Post demonetisation, public sector banks have adequate lending capacity now.