RBI Asked PSBs to Strengthen Their Lending Capacity

RBI Governor Shaktikanta Das lately asked Public Sector Banks to strengthen their lending capacity by raising capital after the recovery of a few bad loans, and the banks being put through the prompt corrective action (PCA) framework by the Reserve Bank of India.

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Over the years, the PSBs have provided such bad loans that had to be written off against their earned capital. From the year 2010 to 2018, the Central Government invested ₹1.12 trillion which helped the PSBs to run during the bad loans. The money for retrievals arrived from the Union budget.
So far the Centre has allocated recapitalization bonds worth ₹2.79 trillion which will get mature from 2028 to 2036. When it will mature, the money for reimbursement will have to come from that respective year budget.

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Till December last year, the PSBs’ share was down over 55%, whereas the share of private banks rose to 36.5%.
Individual PCBs have not been privatized till now but general privatization has been going on in the country for a decade. If in any case, the government wants to cut it down, then it ought to come around a 33% equity.

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Anupama Das

An active reader and follower of news. A budding journalist tries to spread authentic news to people.

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