Guidelines set for rigorous due diligence

The Finance Minster Arun Jaitley has given details of Rs.2.11 lakh crore recapitalisation plan for the public sector banks, as a recovery from non-performing assets (NPAs).

The State Bank of India will get Rs.88 billion, Oriental Bank of Commerce Rs.35.71 billion, Dena Bank Rs.30.45 billion, Centrla Bank of India Rs 51.58 billion, Indian Overseas Bank Rs.46.94 billion, Bank of India Rs.92.32 billion and UCO Bank Rs.65.07 billion.

Punjab & Sind Bank is set to get Rs.7.85 billion, IDBI Bank Rs.106.1 billion, Canara Bank stands Rs.48.65 billion, Union Bank Rs.45.24 billion, Syndicate Bank Rs.28.39 billion and Bank of Maharashtra Rs.31.75 billion.

New set of guidelines will stress on rigorous due diligence, post-sanction follow-up on loans and separate asset management verticals to ensure public savings are untouched.

The bonds will have a maturity of 10 to 15 years and priced at around 8%. The bonds will be cash neutral in nature and thus will not have any effect on the fiscal defici.

The finance ministry said it will not let any public bank to fail, assuring customers that their deposits will be safeguarded at all costs.

Jaitley said that the Department of Financial Services has been undertaking a detailed exercise as to the amount of capital that needs to be infused into public sector banks (PSBs).

The PSBs are faced with mounting NPAs or bad loans, putting the financial sector under stress, and need to be recapitalised.

“The main objective of this flows from the Government’s responsibility to keep public sector banks in good health,” Jaitley told media on 24 Jan 2018. fii-news.com