India’s No.1 Educational Institute Launches a course on ‘Out Of The Box Thinking’
EDUMYRA | 04/Jul/2022IIT Madras has launched a course for students which will be helpful in motivating and inspiring young minds.
Read moreBank offences are increasing in today’s ever growing market, Non-Performing Assets are in a bunch in Indian banking structure which is clearly a very bad sign.
There are 21 Public Sector Banks which are the state-owned banks in India. Public sector banks account for 70 percent of total banking assets in India. The ‘lack of dynamism’ in banking practices at the bank level and at the Finance Ministry level to control judiciously the flow of finance and recovery system to stop an account from turning into NPA, keeps these Public Sector Banks starved of funds and crying for more capital infusion every now and then. The government through RBI infuses funds into these banks with the help of the Bank Recapitalization method.
Since the government has a majority stake in Public Sector Banks, it has to inject capital through the Recapitalization in these banks. The government of India has proposed to infuse 2.11 Lakh Crores in the Public Sector Banks towards recapitalization. The government proposes to issue Recapitalization bonds, raise equity from the market and make the budgetary allocation.
Why the need of Bank Recapitalization?
Most of the PSBs have huge stocks of non-performing loans on their balance sheets. As of June 2017, the NPAs of the banking system was as high as 10.2 % of the loans advanced by the banks. This ratio increased to 12.2% by the end of September 2017.
The volume of bad debt hit 9.46 trillion rupees at the end of half of the financial year 2017 in September 2017. Out of this the share of public sector banks is 8.25 trillion rupees in the pile of bad loans. The banks' deteriorating balance sheets have limited their ability to lend, and that has affected the bank credit growth in India. The bank credit growth in the year 2016-17 was 5.1 %, which is the lowest since 1951. Hence, a massive recapitalization was deemed as necessary to clean up the balance sheet of the banks.
Bank Recapitalizations-Figures
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IIT Madras has launched a course for students which will be helpful in motivating and inspiring young minds.
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