Budget and Banks # The Union budget gave a major fillip to infrastructure lending. Lending to this segment will be now kept out of SLR, CRR and priority lending requirement. IDFC being one of the major lenders to the infrastructure segment, is expected to benefit from this prsposal. # The sale of shares to retail investors will reduce governments requirement for raising equity. Besides, proposal to set up new debt recovery tribunals will improve recovery of non-performing loans with the banks. Major public sector banks such as SBI, Punjab National Bank, Canara Bank, Bank of Baroda are expected to be major beneficiaries from this proposal. # Proposing to provide greater autonomy to public sector banks, Finance Minister Arun Jaitley today said these lenders would require Rs 2.40 lakh crore capital by 2018 to meet global Basel III norms. To be in line with the Basel III norms, there is requirement to infuse Rs 2.40 lakh crore as equity by 2018 in our banks (public sector banks). To meet this huge capital requirement, we need to raise additional resources to fill this obligation, he said in the Budget speech in Parliament. A large part of this fund would be raised through public offers made to retail customers, he said. While preserving the public ownership, the capital of these banks would be raised by increasing the shareholding of capital in the phased manner through sale of shares largely through retail common citizen in the country, he said. # Government would look into the issue of providing greater autonomy to the boards of banks. We will also examine the proposal to give greater autonomy to banks while making them accountable, he said. The interim budget had announced infusion of Rs 11,200 crore in public sector banks to enhance their capital in the current financial year. # The finance minister also expressed concern over the rising stressed assets in the banking system and announced six debt recovery tribunals (DRTs) to expedite recovery process while adding that the government will work out measures to revive stressed assets. “The rising Non Performing Assets of Public Sector Banks is a matter of concern for the Government. Six new DRTs would be set up at Chandigarh, Bengaluru, Ernakulum, Dehradun, Siliguri and Hyderabad,” Jaitley said.
Posted on: Sun, 13 Jul 2014 06:35:13 +0000
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