Under the 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 trillion from the markets to meet their capital requirement in line with global risk norms, known as Basel III.
'Without appropriate supervisory constraints in place, banks are in a position to delay the recognition of losses and engage in ever-greening or zombie lending, which is essentially the rolling over of debts of unviable borrowers that would have otherwise defaulted,' points out RBI Deputy Governor Viral Acharya.
It will be headed by Secretary, Department of Financial Services.
Tamil Nadu-based Lakshmi Vilas Bank (LVB) with pre-independence lineage on Friday lost its identity after its merger with the Indian subsidiary of Singapore's DBS Bank. The debt-ridden 94-year old old bank's fate was sealed with Union Cabinet headed by Prime Minister Narendra Modi approving Scheme of Amalagamation on Wednesday.
Fitch said the full implications of Patel's resignation will only become clearer once there is some indication of the RBI's policy approach under his replacement, Shaktikanta Das
Non-performing assets of banks have increased from Rs 2.75 lakh crore in March 2015 to Rs 7.33 lakh crore as on June 2017.
The bank has fixed an issue price of Rs 1,782.74 per share for a preferential stock allotment to the government as part of the capital infusion plan for this fiscal. The SBI board had approved the preferential allotment in October.
Government to infuse funds in cash-strapped banks.
The Finance Ministry has asked top rung exectives of United bank of India to furnish bad loan recovery report on daily basis.
Move to increase 90-day window to 120 days to give more time to borrowers to service loans.
State Bank of India is also expected to tap the markets this year
Jaitley said that the banks have to play an important role in achieving the higher growth rate.
The main issue has been that of a higher Asset Management Ratio as has been prescribed by the Monetary Authority of Singapore for qualifying full banks from India.
The RBI governor, who made a presentation about the state of the economy as well about the world economy to the 31-member Parliamentary Standing Committee on Finance, stayed clear of controversial questions like government invoking special powers.
Last year, the government had announced to infuse Rs 70,000 crore in PSU banks.
The central bank will come out with fresh set of guidelines for companies applying for on-tap bank licence
The PCA plan covers various suggestions or measures to recover non-performing assets (NPAs), reduce costs, boost capital, downsize risk-weighted assets, and improve profitability, among others. The LVB management is in the process of implementing all of these, said sources.
There is as yet no clarity on how the process of consulting with the RBI Governor, initiated under Section 7 of the RBI Act, would unfold in the coming days. The government is keen that its suggestions made in the public interest should be heeded by the central bank, says A K Bhattacharya.
The government plans to inject a total Rs 70,000 crore into the lenders over four years
Privatisation or consolidation into half a dozen large banks might not rescue public sector banks from the crisis they find themselves in.
Relying on the private sector to undertake infrastructure investment may not be a realistic proposition.
India's aggregate NPA as a percentage of GDP is far lower than that in Italy, Greece.
Banks to be permitted to raise long-term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and Priority Sector Lending.
The decision in this regard, however, is expected to be taken by the new government.
Global rating agency Standard & Poor's today said 2014 will continue to be a challenging year for the asset quality and profitability of the country's banks as the economy is expected to make a tepid recovery.
New regime on loans to one party to kick in by Apr 2019.
"The downgrade of the bank's BCA and ratings reflects the negative impact of the discovery of a number of fraudulent transactions on the bank's standalone profile, particularly its capital position," the rating agency said in a report.
Report says stressed asset level to peak at 15% in 2014-15.
Higher interest rate will be payable to FDs of over Rs 1 cr.
'The macro-economic stresses -- high interest rates, rupee depreciation and capital flows -- have receded now.' 'Interest rates have come down, inflation is down and the rupee has bounced back.' 'If oil prices continue at this level, there will be no vulnerability.' 'Growth is a different story.'
The net non-performing assets of the bank increased to 0.69 per cent at the end of first quarter.
The government is somehow convinced that selective low-rate lending will stimulate demand and accelerate economic growth that plunged to a four-year low of 4.4 per cent in the first three months of 2013-14.
Union Finance Minister Arun Jaitley is set to present the Budget next month.
Finance Minister Arun Jaitley said that at a time when the private sector has been somewhat conservative in investments, public investment always takes the lead.
In the past few months, 45 companies have signalled their intent to raise money through the institutional placement route.
'There is merit in keeping the central bank's balance sheet strong if the government's fiscal balance sheet is weak.'
The flawed response to the crisis has fed a us-vs-them mentality in which the banker, the expert, the coastal entrepreneur, the immigrant, the foreigner are all villains. The crisis was not that much of a problem; the response -- the over-reaction, the sovereign debt build-up and the lasting anger -- is the problem, says Mihir S Sharma.
'I am sure Dr Patra will get the fullest cooperation from the finance minister who needs workhorses, not prima donnas constantly looking to improve their CVs,' says T C A Srinivasa-Raghavan.
Rating agency Care Ratings said the gross non-performing assets ratio of domestic banks will increase to 4.5 per cent by March 2014 and impact the profitability by up to 30 per cent.
RBI says haste in easing norms for banks harmful to economy.
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