PSU banks: Past imperfect, present tense, future uncertain5 min read 05 Nov 2017, 07:10 PM IST
After bank recapitalisation, what? Will we see the government push the agenda for PSU bank consolidation to further banking reforms?
Finance minister Arun Jaitley’s big bang Rs2.11 trillion bank recapitalisation announcement has led to a string of debates, discussions and unending speculation on the future of Indian banking. Banking sector analysts, the bankers themselves and the economists are looking for answers to many questions. Will this money be enough to meet the capital needs of public sector banks, keeping in mind the requirement of Basel III norms which will be in place in 2019? How much of this fund infusion is growth capital? Will the banks be able to raise money from the market sans the support of Life Insurance Corp. of India, the proverbial investor of the last resort of any divestment of the government stake? Or, for that matter, what will be the contour of the recapitalisation bonds worth Rs1.35 trillion? Will the government float a special purpose vehicle to do the job? What will be the impact of such bonds on India’s fiscal deficit?