Country Paying To Keep The Banking System Healthy, Says Jaitley
Finance Minister Arun Jaitley today said the government has decided to inject more capital in state-owned banks to strengthen the banking system and spur economic growth.
The government last month unveiled a Rs 2.11 lakh crore two-year road map to bolster public sector banks through recapitalisation bonds, budgetary support and equity dilution. “...it's the country which is virtually going to pay to keep the banking system in good health,” he said addressing heads of state-owned banks at 'PSB Manthan'.
The finance minister assured the bankers that “you won't find us interfering” in commercial transactions, but “when the system is making all these changes and all these monetary contributions in order to strengthen the banking system, we want a robust public sector banking system so that your ability to support growth itself increases”.
Non-performing assets of public sector banks increased to Rs 7.33 lakh crore as of June from Rs 2.78 lakh crore in March 2015. In the last three-and-a-half years, the government pumped in more than Rs 51,000 crore capital into public sector banks.
One of the focus areas banks have taken up is to support micro, small and medium enterprises because the sector that creates jobs and gives boost to the economy has no access to international finance or the bond market, Jaitley said. The government is spending a lot of public money and foreign investment is coming in, he said
“We need the third engine also to fire and a robust private sector, MSME sector so that optimum growth rate which we have the potential for can be reached,” he said.
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