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NEW DELHI: The government will push large public sector banks (PSBs) to tap the market for fresh capital in the next fiscal as it is not inclined to give them growth capital soon after having infused large amount of funds this year.
It is also seeking details from state-run lenders on action taken in cases of bad loans above Rs 50 crore.
“At least 2-3 stronger banks can approach the markets in the first half of next fiscal,” said a finance ministry official, adding the government is not keen to infuse anymore capital in PSBs unless for regulatory requirements.
In the current fiscal, the government has already infused the Rs 1.6 lakh crore of bank capitalisation plan announced earlier.
This helped five banks climb out of the Reserve Bank of India’s prompt corrective action (PCA) framework.
The government expects the remaining five lenders to come out of PCA by the end of next year.
“Some large cases being pursued through bankruptcy route are also expected to finally get settled in the first quarter next fiscal,” the above quoted official adding this would further raise the banks’ capital.
The Insolvency and Bankruptcy Code (IBC) has led to record recovery Rs 98,493 crore by PSBs in first nine months of FY19.
According to a recent IBA-BCG report, stress recognition is almost complete in PSBs and standard restructured advances as a percentage of gross advances plunged to 0.5% in December 2018 from 7% in March 2015.
BIG LOANS SCRUTINYLast year, the government had asked all state-run banks to examine non-performing (NPA) loans of more than Rs 50 crore for any sign of fraud.
“PSB managing directors directed to detect bank frauds consequential wilful defaults in time refer cases to CBI.
To examine all NPA (non-performing asset) accounts Rs 50 crore for possible fraud,” department of financial services secretary Rajeev Kumar had tweeted.
Banks were further directed to seek passport details of borrowers taking loans of Rs 50 crore and more.
The government is seeking a status report from the state-run banks.
“We need to have an assessment of the current status of such exposure gone bad, are there any recoveries expected and if a fraud has been detected, then, what is the legal action being pursued,” said a finance ministry official, adding that bad loans for PSBs are already on a decline and a clear picture will help firm up plans for any emergency capital that may be required by lenders.
