NEW DELHI : On a day when the staff of state-owed banks went on a two-day strike demanding higher pay, Finance Minister P. Chidambaram said profits of banks must be used to infuse capital back into the lenders rather than on hiking wages.
“It cannot be that all profit are used to declare dividend and to provide enhanced wages and allowance to bank employees. A significant part of the retained earnings must be used for infusing additional capital in banks otherwise we cannot find the amount of capital which is required over next 5, 10, 20 years,” he said at the Foundation Day celebrations of Indian Overseas Bank.
In 2012-13, banks had infused Rs 379.36 bln as capital out of their retained earnings, compared with Rs 350 bln a year ago, Chidambaram said. He also raised concerns over non-performing assets, but added that while banks must identify wilful defaulters, they must be sympathetic to those businesses caught in the slowdown. -Cogencis