KC Chakrabarty, former deputy governor of the Reserve Bank of India is apprehensive that the Rs 2.11 lakh crore recapitalisation plan announced by the government for state-owned banks may not be enough.
The amount is “too little” given that the non-performing assets in the Indian banking system, a majority of which is with the public sector banks, is close to Rs 10 lakh crore, Chakraborty told BloombergQuint in an interview.
If you see the provisioning gap, the provisioning coverage ratio is only 40 percent if you see all the banks. So already there is a gap of Rs 6 lakh crore. Over and above that, there are accounts which are restructured, which are under the 5/25 scheme, strategic restructuring and many where the accounts have still not been classified as NPA...To my mind, the total provisioning gap is Rs 8-10 lakh crore.KC Chakrabarty, Former Deputy Governor, RBI
The Indian government Tuesday had announced an allocation of Rs 2.11 lakh crore over two years to assist public sector banks make adequate provisions against bad loans and revive lending.
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The former RBI deputy governor said privatisation of the state-owned lenders and infusion of fresh equity from outside is the need of the hour to strengthen these banks.
Watch the full interview here:
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