Govt readies Rs 70k cr bank recap plan

The government on Friday announced a Rs 70,000 crore recapitalization packagefor public sector banks that will help them tide over equity constraints and provide them funds to lend at a time when some of the lenders are grappling with mounting bad debt, prompting them to go slow on sanctioning loans. 

The funding plan is spread over four years with Rs 25,000 crore to be handed out this year and a matching amount flowing out during the next financial year as part of a hand-holding exercise when the banks are going through a rough patch. While hoping that their valuations would improve, enabling them to tap the capital markets, and the pressure of non-performing loans would come down, the government plans to provide Rs 10,000 crore each during 2017-18 and 2018-19 Stock Market Trading Tips 

"It is a long overdue step. Government in the past has talked about it. But this time government is actually implementing it," finance minister Arun Jaitley said in a statement. 

Till 2018-19, the finance ministry has assessed the capital requirements of state-run banks at around Rs 1.8 lakh crore and the remaining amount (Rs 1.1 lakh crore) is expected to come from the markets. While Rs 7,940 crore had been allocated in the budget, on Friday, Jaitley sought Parliamentary approval for spending of another Rs 12,010 crore. The remaining around Rs 5,000 crore would be allocated in the March quarter, and would be given to banks that perform better. Financial services secretary Hasmukh Adhia said Rs 20,000 crore may be provided to banks by September Advance Market Prediction Book 2015

"The allocation for first-year recapitalisation is adequate... It's a good beginning," RBI governor Raghuram Rajan told reporters. 

During the current financial year, Rs 10,000 crore would be allocated to banks that have low capital adequacy ratio, while a matching amount is expected to go to the stronger players, helping them lend at a time when the government is trying to boost economic activity Financial Astrology Trading tips

"This estimate (of Rs 1.8 lakh crore fund requirement in four years) is based on credit growth rate of 12% for the current year and 12-15% for the next three years depending on the size of the bank and their growth ability. We are also presuming that the emphasis on public sector banks' financing will reduce over the years by development of vibrant corporate debt market and by greater participation of private sector banks," the finance ministry said Jackpot Trading Tips