Govt To Grant Adequate Capital To PSU Banks To Meet Global Risk Norms: FM (21-Feb-2012)
Finance Minister, Pranab Mukherjee has recently stated that the government is keen to bring Indian public sector unit (PSU) banks at par with their global peers while catering to the needs of our economy. He has appreciated the resilience shown by Indian banks during the global economic crisis but has cautioned that there is no room for complacency as the global environment is still uncertain. The minister further said that the government is taking steps to ensure that public sector banks have adequate capital to meet global risk norms.
By adding further, the finance minister said, the government was committed to maintain a minimum of 8% Tier-I capital (equity capital) in all public sector banks (PSBs), which is over and above the regulatory requirement of 6%. He said the government had provided capital to state- owned banks last fiscal, and it was taking necessary steps to keep banks adequately capitalised in 2012-13 as well. He said the Basel III capital regulations would be implemented from the beginning of next year.
BASEL III is a global regulatory standard on bank capital adequacy, stress testing and market liquidity risk agreed upon by the members of the Basel Committee on Banking Supervision in 2010-11. Basel III strengthens bank’s capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage. The draft guidelines on Basel III capital regulations was released December 30, 2011 and it is scheduled to be implemented from January 1, 2013.
In 2010-11, the government provided capital support to the tune of Rs 20,157 crore to public sector banks. They include Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank. This fiscal, the government will infuse over Rs 7,900 crore in SBI. It is further slated to capitalise more banks by March.
On the government's financial inclusion programme, the finance minister said that banking services to un-banked villages with a population of 1,000 or more will be provided within a couple of years. He added that banks can play a very major role through inclusive programmes like Swabhimaan, and by extending facilities to the large number of rural population. Commenting on the leakages due to subsidies the minister said that if these subsidies are provided through the banking network and institutional financial networks, the leakage will be reduced substantially.
Mukherjee said the government was in the process of implementing an e-payment system for direct credit of dues from the central government to the beneficiaries and the new payment system would bring transparency and expedite direct payments for subsidies from central paying units to the targeted beneficiaries of fertiliser, kerosene and cooking gas.
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