The government has budgeted for a support of nearly Rs 9,000 crore (Rs 90 billion) to financial institutions in 2003-04, including Rs 6,500 crore (Rs 65 billion) for the Unit Trust of India's flagship US-64 scheme. This is in addition to Rs 6,287 crore (Rs 62.87 billion) to be provided in the current fiscal.
The Rs 6,500 crore (Rs 65 billion) earmarked for the UTI is to meet the shortfall between the assured repurchase prices of US-64 units, which are due for redemption in May this year, and the prevailing net asset value. This includes a cash-neutral support of Rs 3,500 crore (Rs 35 billion) through issue of securities.
During the current fiscal, the government will provide an assistance of Rs 2,449 crore (Rs 24.49 billion) to the mutual fund, which includes a cash support of Rs 938 crore (Rs 9.38 billion).
For IFCI and Industrial Development Bank of India, the government has provided Rs 2345.98 crore (Rs 23.45 billion) for 2003-04 to help them meet the interest gap between the present interest rate on bonds issued by them and the reset rates. While Rs 772.98 crore (Rs 7.72 billion) will be given to IDBI, a cash support of Rs 1,573 crore (Rs 15.73 billion) has been earmarked for IFCI.
The government has also budgeted Rs 543.77 crore (Rs 5.43 billion) for IFCI in the current fiscal. The assistance is expected to be given out in the third demand for grants.
A provision of Rs 46 crore (Rs 460 million) has also been made for the Small Industries Development Bank of India during the next fiscal.
During the current fiscal, the government will give an assistance of Rs 770 crore (Rs 7.7 billion) to Indian Bank and is writing down the capital of two other nationalised banks -- Central Bank of India (Rs 681.31 crore) and Uco Bank (Rs 1,665.16 crore) -- valued at Rs 2,346 crore.
The move will help the banks clean up their balance sheets and enable them to tap the markets to raise funds. The adjustments will be matched by receipts and recoveries on capital account.
The government has also provided for an assistance of Rs 589.78 crore (Rs 5.9 billion) during the current financial year to compensate IDBI (Rs 230.89 crore), ICICI, HDFC (Rs 313 crore) and National Housing Bank for the exchange loss involved in repayment of foreign lines of credit. For the next fiscal, a provision of Rs 46 crore has been made for ICICI, NHB and HDFC for the same purpose.
In addition, the government will provide an assistance of Rs 100 crore (Rs 1 billion) to LIC during the next fiscal of which Rs 70 crore (Rs 7 billion) will be for community-based universal health insurance and the remaining as interest subsidy for the pension plan for senior citizens that comes with an assured return of 9 per cent.
On the positive side, three nationalised banks returned capital worth Rs 385.87 crore (Rs 385.87) to the government -- Union Bank of India (Rs 58 crore), Canara Bank (Rs 277.87 crore) and Andhra Bank which are slated to return Rs 50 crore each during 2002-03 and the next financial year.
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