Finance Ministry lays out Rs 70000 cr for four year plan
Updated: Aug 01, 2015 02:47:00pm
New Delhi, August 1 (KNN) Finance Minister Arun Jaitley on Friday said that the government has laid down Rs 70000 crores long term four year plan for bank capitalisation to give a boost for investment and growth in India.
He was speaking in connection with the supplementary demand for grants of 2015-16 being laid in the Parliament today, in which Rs 12000 crore has been provided for bank capitalisation
Out of the total requirement, the government proposed to make available Rs 70,000 crores out of budgetary allocations for four years as Financial Year 2015 -16 - Rs 25,000 crore; Financial Year 2016 -17 - Rs 25,000 crore; Financial Year 2017-18 - Rs 10,000 crore and Financial Year 2018-19 - Rs 10,000 crore.
“We estimate that PSB’s market valuations will improve significantly due to far-reaching governance reforms; tight NPA management and risk controls; significant operating improvements; and capital allocation from the government,” said Jaitley.
Improved valuations coupled with value unlocking from non-core assets as well as improvements in capital productivity, will enable PSBs to raise the remaining Rs 110,000 crore from the market. However, the government is committed to making extra budgetary provisions in FY 18 and FY 19, to ensure that PSBs remain adequately capitalized to support economic growth, he said.
In the supplementary demand presented today, an amount of Rs 12,000 crore has been provided, in addition to Rs 7940 crores already provided in the budget of FY 2015-16. The remaining Rs 5,000 crore would be provided in the second supplementary later this year.
The Rs 25,000 crore capital this year will be allocated through three tranches to meet three different objectives - about 40 per cent of this amount will be given to those banks which require support, and every single PSB will be brought to the level of at least 7.5 per cent by Financial Year 2016; 40 per cent capital will be allocated to the top six big banks namely SBI, BOB, BOI, PNB, Canara Bank, and IDBI Bank in order to strengthen them to play a vital role in the economy; and the remaining portion of 20 per cent will be allocated to the banks based on their performance during the three quarters in the current year judged on the basis of certain performance. This will incentivize them to improve their performance in the current year. (KNN Bureau)
He was speaking in connection with the supplementary demand for grants of 2015-16 being laid in the Parliament today, in which Rs 12000 crore has been provided for bank capitalisation
Out of the total requirement, the government proposed to make available Rs 70,000 crores out of budgetary allocations for four years as Financial Year 2015 -16 - Rs 25,000 crore; Financial Year 2016 -17 - Rs 25,000 crore; Financial Year 2017-18 - Rs 10,000 crore and Financial Year 2018-19 - Rs 10,000 crore.
“We estimate that PSB’s market valuations will improve significantly due to far-reaching governance reforms; tight NPA management and risk controls; significant operating improvements; and capital allocation from the government,” said Jaitley.
Improved valuations coupled with value unlocking from non-core assets as well as improvements in capital productivity, will enable PSBs to raise the remaining Rs 110,000 crore from the market. However, the government is committed to making extra budgetary provisions in FY 18 and FY 19, to ensure that PSBs remain adequately capitalized to support economic growth, he said.
In the supplementary demand presented today, an amount of Rs 12,000 crore has been provided, in addition to Rs 7940 crores already provided in the budget of FY 2015-16. The remaining Rs 5,000 crore would be provided in the second supplementary later this year.
The Rs 25,000 crore capital this year will be allocated through three tranches to meet three different objectives - about 40 per cent of this amount will be given to those banks which require support, and every single PSB will be brought to the level of at least 7.5 per cent by Financial Year 2016; 40 per cent capital will be allocated to the top six big banks namely SBI, BOB, BOI, PNB, Canara Bank, and IDBI Bank in order to strengthen them to play a vital role in the economy; and the remaining portion of 20 per cent will be allocated to the banks based on their performance during the three quarters in the current year judged on the basis of certain performance. This will incentivize them to improve their performance in the current year. (KNN Bureau)
Loading...
