Bankers welcome Rs 10k cr capital infusion for recapitalisation

 Welcoming the move by Finance Minister Arun Jaitley to infuse Rs 10,000 crore into public sector banks in the next fiscal, and more being provided if required, bankers have hailed it as a morale booster.

Dena Bank Chairman and Managing Director Ashwani Kumar said, “Capital infusion for recapitalisation of PSU banks will be a morale booster in scenarios where banks are in dire need of capital for credit growth and Basel III compliance.”

“Further, the deductions allowed for NPA provisions made by banks have been increased by up to 8.5% of the income, which will act as a breather in supplementing
profitability of banks,” Kumar added.

Bank of India MD and CEO Melwyn Rego said, “As a positive for the banking sector, thrust has been accorded to evolving a swifter and effective resolution mechanism. Provision for NPAs to avail tax benefits has been raised. Target under PMMY (Pradhan Mantri Mudra Yojana) has been doubled to benefit the poor and under-privileged.”

Bandhan Bank MD and CEO Chandra Shekhar Ghosh said, “The key take away is containment of fiscal deficit at 3.2% of GDP in fiscal year 2018. This has also brought down the net government borrowing to Rs 3.48 trillion. This will have a positive impact on the interest rates.”

Federal Bank MD and CEO Shyam Srinivasan said, “Galvanised digitalisation on the back of demonetisation has given access to rich data and mining of the same is for sure going to help zero-in on various tax enhancement opportunities. This, combined with a credible disinvestment path, should help create the space for the much-required investment in infrastructure.”

“There are many positives for banks like the balance between need to spend and maintain fiscal discipline,” Axis Bank CEO Shikha Sharma said. She also said infra investments in the absence of private sector investments with a focus on the rural pockets is also a positive, along with the stress on housing and simplification of taxes. The increase in allowable provision for NPAs from 7.5 to 8.5%, which will reduce the tax liability for the banks, was also welcomed by the sector.

Under Indradhanush roadmap announced in 2015, the government will infuse Rs 70,000 crore in state banks over four years while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms, known as Basel—III.

In line with the blueprint, public sector banks has been given Rs 25,000 crore in each fiscal, 2015—16 and 2016—17. Besides, Rs 10,000 crore each would be infused in 2017—18 and 2018—19.

The government has already announced fund infusion of Rs. 22,915 crore, out of the Rs 25,000 crore earmarked for 13 PSBs for the current fiscal. Of this, 75% has already been released to them.