Government to soon recapitalise some PSBs with Rs 10,000 cr
New Delhi, July 17 : The government is likely to recapitalise some state-run banks in urgent need by up to Rs 10,000 crore within a few days to help them meet regulatory capital requirements, official sources said on Tuesday.
According to the Finance Ministry sources here, these banks, which include the Punjab National Bank (PNB), Corporation Bank and the Central Bank of India, are under pressure to make interest payment to bond holders of their Additional Tier 1 bonds.
The high accumulated non performing assets (NPAs), or bad loans, of banks and the consequent provisioning for these, has hugely dented bank profits, while the government has decided to recapitalise four-five banks which are facing "acute shortage and risk breaching the regulatory capital requirement", the officials said.
The fresh round of capital infusion of between Rs 8,000 and Rs 10,000 crore may take place within this week, or latest by the next, in these public sector banks (PSBs).
Last October, the Union Cabinet approved a Rs 2.11 lakh crore recapitalisation plan for PSBs.
In January this year, the government notified the recapitalisation bonds to allocate Rs 80,000 crore to 20 of these state-run banks. The bonds, split into six instalments, bear interest rates between 7.35 per cent and 7.68 per cent and will mature between 2028 and 2033.
The State Bank of India (SBI) will receive the biggest share of capital from the recapitalisation bonds, estimated at Rs 8,800 crore, followed by the IDBI Bank at Rs 7,881 crore and the Bank of Baroda at 6,975 crore.
As per the plan, PSBs are to get Rs 1.35 lakh crore through recapitalisation bonds, and the balance Rs 58,000 crore through raising of capital from the market.
The NPAs in the Indian banking system have reached a staggering level of Rs 9 lakh crore, while the bad loans of only the state-run banks add up to nearly Rs 8 lakh crore.
The government has embarked on a two-pronged strategy on bad loans.
On the one hand, it has brought in the Insolvency and Bankruptcy Code (IBC) which provides for a six-month time-bound insolvency resolution process, and on the other, it has adopted the recapitalisation plan to support the PSBs.
Commenting on the development, Acuité Ratings & Research President-Ratings Suman Chowdhury described the proposed fund infusion in PSBs as a significant affirmative action which will assure the bank bond investors of continuing government support.
"It reinforces our belief that the government would continue to support the PSBs particularly those under PCA (prompt corrective action) of the RBI and would not allow regulatory capital breaches which might lead to defaults in hybrid and perpetual instruments," Chowdhury said in a statement.
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AP Home Minister says she takes Pawan Kalyan's remarks 'positively'
Amaravati, Nov 5: Andhra Pradesh Home Minister Vangalapudi Anitha on Tuesday said she viewed Deputy Chief Minister Pawan Kalyan's remarks on her handling of the state's law and order situation in a constructive way.
Anitha’s response followed Kalyan’s criticism the previous day over deteriorating law and order conditions and increased violence against women, particularly five months into the tenure of the new coalition government comprising the TDP, BJP, and Janasena.
"I took his (Kalyan’s) comments positively. His press meet was, in fact, encouraging. He provided a supportive foundation for my work and urged me to be even more assertive. That's what he communicated,” Anitha told reporters.
Anitha added that, as the Home Minister, she recognises her responsibilities and the demands of her role.
She also emphasised that Kalyan did not label her a failure.
The Home Minister noted that she had spoken to Kalyan about the matter, and he clarified that he was referring to the alleged registration of cases based on caste under the previous YSRCP government.
Further, she underscored that Andhra Pradesh is strict about maintaining law and order.
“The Chief Minister is serious that anyone contemplating a crime should fear. He (CM) said we will bring special laws to deter criminal behaviour. This message came directly from the CM,” she said.
Defending Kalyan as the Deputy Chief Minister, Anitha claimed that some people were "unnecessarily politicising" the issue.
On Monday, the Deputy CM expressed concerns about the state’s law and order situation, suggesting that “things would be different” if he were the Home Minister—remarks seen as direct criticism of Vangalapudi Anitha.
His comments came after recent incidents, including the rape and murder of a four-year-old girl by a relative in Tirupati district.
Meanwhile, YSRCP leader B Rajendranath sought to know who Kalyan was questioning.
"Whom are you (Kalyan) questioning? You are in power. You are the Deputy Chief Minister. Are you questioning yourself, your government, a particular minister, the CM, or the police department? We do not understand," Rajendranath said during a press conference in Hyderabad.
Rajendranath noted that while Anitha holds the Home Department portfolio, law and order is overseen by the CM. He questioned Kalyan's criticism of the police department’s functioning, reasoning that the government cannot operate without the system in place.
He advised Kalyan to address crime effectively, while former Tourism Minister and YSRCP leader RK Roja suggested that Kalyan’s comments reflected "failure" on the part of both the Deputy Chief Minister and Chief Minister.
Further, she alleged that the Home Minister has become "useless".
