The Finance Minster Arun Jaitley on Wednesday revealed the details of Rs 2.11 lakh crore recapitalisation plan for the public sector banks.
Under the new banking roadmap, State Bank of India will get Rs 88 billion, Rs 35.71 billion will go to Oriental Bank of Commerce, Rs 30.45 billion to Dena Bank, Rs 51.58 billion to Central Bank of India, Rs 46.94 billion to Indian Overseas Bank, Rs 92.32 billion to Bank of India and Rs 65.07 billion to UCO Bank.
Punjab & Sind Bank is set to get Rs 7.85 billion, IDBI Bank will get Rs 106.1 billion, Canara Bank stands will get Rs 48.65 billion, Union Bank will get Rs 45.24 billion, Syndicate Bank will get Rs 28.39 billion and Bank of Maharashtra will get Rs 31.75 billion.
The new set of guidelines, the finance ministry said, will stress on rigorous due diligence, post-sanction follow-up on loans and separate asset management verticals to ensure public savings are untouched.
While responding to queries, financial secretary and Subhash Garg, said that the bonds will have a maturity of 10 to 15 years and priced at around 8 per cent. The bonds will be cash neutral in nature and thus will not have any effect on the fiscal deficit, they added.
The finance ministry said it will not let any public bank to fail, assuring customers that their deposits will be safeguarded at all costs.
Finance Minister Arun Jaitley said that the Department of Financial Services has been undertaking a detailed exercise as to the amount of capital that needs to be infused into public sector banks.
"The main objective of this flows from the Government's responsibility to keep public sector banks in good health," FM Jaitley told media.
With days left in the presentation of the current Modi Government's last full Union Budget, the finance minister said that the Centre hopes to 'build an institutional mechanism to ensure that the problems that we inherited do not recur'.
Also present at the presser, Rajeev Kumar, Secretary, Department of Financial Services, said repositioning public sector banks will lead to growth and serve 'people responsibly and responsively'.
650-million first generation bank accounts will not have any minimum balance penalty, said Kumar.
The other major announcements made by the government include an 'annual report card' for each of the PSBs and providing banking facility at all corners of the country within a radius of 5 kilometres.
The PSBs are faced with mounting non-performing assets (NPAs) or bad loans, putting the financial sector under stress, and need to be recapitalised.
