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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Representative of Iran's Supreme Leader in India calls current situation 'no war, no peace'
Bengaluru (PTI): Representative of Iran's Supreme Leader in India, Abdul Majeed Hakeem Ilahi on Saturday characterised the ongoing tensions between his country and the Israel-US alliance as a state of “no war, no peace”.
Calling for an immediate halt to the conflict, he said the global stability hinges on those who initiated the war.
He questioned why countries affected by the war and suffering from the energy crisis are not pressuring the US and Israel to stop the aggression.
Addressing a press conference here, Ilahi said Iran did not want the conflict, but was compelled to respond amid continued attacks, even as negotiations were expected to continue.
"Iran didn't want this war, but Iran was forced by the war and several times Iran tried to avoid this war... I don't know what is the condition of these people and these countries (US-Israel)... they want to impose on other countries what they want, and who gave them this authority?" he questioned.
Recalling the negotiations Iran held in Oman, he said talks later moved to Geneva and made progress before being disrupted by sudden attacks.
Ilahi claimed that airstrikes and missile attacks led to the deaths of Iran’s supreme leader Ayatollah Ali Khamenei, ministers, commanders and civilians.
"They killed a lot of civilians… They attacked a primary school, and they killed 175 innocent girls," he said, claiming over 4,000 deaths, more than 40,000 injuries, and widespread damage to houses, hospitals, universities and public infrastructure.
Despite these losses, he said Iran resisted calls for “unconditional surrender” and stood firm and defended itself.
"They wanted unconditional surrender. Which no one—no one can accept it. Iran said, 'Okay, we are ready to be sacrificed,' but we are not ready to submit ourselves," he added.
He argued that they (US-Israel) proposed the current ceasefire only after realising that they could not achieve any of their objectives after 40 days of conflict.
The envoy further claimed that the ceasefire is not an actual ceasefire, but a “no war, no peace” situation.
Explaining the current situation in Iran, he said conditions remain stable and people are going about their daily lives.
"They are working ....(leading) their ordinary life. They are working—they're going farming and they do everything....and they aren't scared of anything. And they are ready to defend themselves," he added.
Addressing the crisis in the Strait of Hormuz, he said the situation was stable before February 28 and all countries benefited from it.
"(For) 10,000 years, the Strait of Hormuz was open...and Iran daily yearly spent a lot for providing security in the Strait of Hormuz... so no one even complained anything about the Strait of Hormuz. Everyone was free...and even our enemies their warship was passing through the Strait of Hormuz," he said.
However, he linked the current maritime instability to the actions of the US and Israel.
"So Iran cannot do anything. Those people who initiated, created and started this war, they have to stop it. And everything will go back to normal," he said.
Criticising the mentality of the "great powerful country", Ilahi said, "they think they have the right to do whatever they want. It should change."
He sought to know why the countries affected by the conflict are not exerting pressure on the US and the "Zionist" regime to halt the war.
"Why are they not asking them? This crisis and problem by which a lot of countries are affected was created by them. A lot of factories are closed and even working days in some countries reduced... A lot of restaurants are closed," he said.
Seeking fairness and justice, Ilahi said instead of asking Iran, all those nations should ask those who initiated this war to stop it, by telling them, "we are suffering."
To a query on international mediation, Ilahi, referring to the US, asked, "Is it acceptable and reasonable that one country orders all countries -- you should not deal with this country, You should not purchase from this country. You should not have business with this country. You should not buy from this country."
Ilahi also highlighted Iran's long-standing ties with India and said, "It is a great country and we respect India and Indians."
"We have 5,000 years relationship and friendship. We are connected to India by education, by philosophy, by culture, by civilisation and by the economy," he said.
According to him, the bilateral cooperation remains strong, citing diplomatic engagement.
"At the moment also, our relationship, collaboration, cooperation with India is very good," he said, adding Iran allowing Indian ships to pass through Strait of Hormuz reflects the ties.
"Iran allowed Indian ships to pass through the Strait of Hormuz. Why? A lot of countries couldn't get this permission?... The relationship between Iran and India is very good," he added.
He expressed confidence that in future too, the ties between Iran and India will be strong.
