Infusion of Funds into PSBanks-A positive Step

The Criticism from many sides that our financial positions is not strong enough, the government has taken a bold step of infusion of Public sector banks(PSU) with Rs 2.11 lakh crore.This is hailed by experts as an appropriate step because the PSU banks are in an ailing position due to an increase of Nonperforming Assets (NPA) to the time of lakhs of rupees.Now the government is ready to infuse money into these PSUs so that the lending capacity of banks may increase which in turn small and medium industries will have elbow space for their expansion, maintenance like purposes.

For the sake of this RS 2.11 lakh core the current financial year and next year the government will issue recapitalisation bonds worth Rs 1.35 lakh crore.Budgetary support of Rs 18,000 crore would be provided.For the sake of remaining Rs, 58,000 crore banks will be asked to raise the capital from market..The two points perfomance and potential of banks will be considered in fund infusion process .The bank size and ethos , prudence in lending will be estimated .

Finance minister Arun jaitley has explained that during 2008-2014 indiscriminate lending turned into NPAs and they were kept under carpet .FM added much cleaning has taken place and recapitalisation bonds issued details would be mentioned later.Direct Government borrowing may have some risks.The International Monetary Fund (IMF) approved norms will be followed in this. ratings agency CRISIL says banks require 1.4 to 1.17 lakh crore by March 2019.The governments push already fired stocks of banks like syndicate, Andhra, PNB, IDBI banks in BSE and its benchmark sensex closed 0.3 % higher.

Senior Resident representative of IMF in Bombay Andreas bauer hailed the step as positive .A series of reforms are needed to gain 8% growth he said .Any way the move is turned as the earlier it is better and necessary.