New Delhi : The Reserve Bank said Rs 7,940 crore earmarked for recapitalisation of PSU banks in the current fiscal is not adequate and has asked Finance Ministry to increase the quantum of assistance in view of mounting bad loans and to support growth.
“We have been suggesting to the Finance Ministry from time to time that the public sector banks need more capital than what budget has indicated. So, we have been raising this issue at various discussions and forums and it was also formally written by Reserve Bank of India,” RBI Deputy Governor S S Mundra said here. “Budgeted amount which is over Rs 7,000 crore will not be adequate from the both perspective for enabling the bank for clean up of the books which is required and growth when it comes back, to support it,” he said. Last fiscal, government infused Rs 6,990 crore in 9 public sector banks based on their performance.
Asked about additional quantum of infusion needed beyond the budget amount, Mundra said there is no single way of calculation on the requirement and it is based on various factors.
“We have done some broad calculation for entire part of Basel-III committee implementation… What we are trying to indicate is that at this point of time because of certain stress on the book some capital would be consumed for cleaning of the books,” he said. That cleaning is vital because when growth returns capital would be needed to support it, he said, adding that growth can be well supported with cleaner balance sheet rather than with a stress on books.
