The government plans to come out with ‘Indradhanush 2.0’, a comprehensive plan for recapitalisation of public sector lenders, with a view to make sure they remain solvent and fully comply with the global capital adequacy norms, Basel-III.
‘Indradhanush 2.0’ will be finalised after completion of the Asset Quality Review (AQR) by the Reserve Bank, The review is likely to be completed by March-end.
Impact on stocks
The RBI had embarked on the AQR exercise from December 2015 and had asked banks to recognise some top defaulting accounts as non-performing assets (NPAs) and make adequate provisions for them.
It has had a debilitating impact on banks’ numbers and their stocks. The central bank has set a deadline of March 2017 to complete the AQR exercise.
“Post (the) Asset Quality Review (AQR) exercise by the RBI to clean up the balance sheets of PSBs, the numbers are being re-looked at and a revised programme of capitalisation will be issued as part of ‘Indradhanush 2.0’,” said a Finance Ministry document.
Under ‘Indradhanush’ roadmap announced in 2015, the government had announced an infusion of ₹70,000 crore in state-run banks over four years while they will have to raise a further ₹1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms, known as Basel-III.
75% funds released
In line with the plan, public sector banks were given ₹25,000 crore in 2015-16, and a similar amount has been earmarked for the current fiscal. Besides, ₹10,000 crore each would be infused in 2017-18 and 2018-19.
The government has already announced fund infusion of ₹22,915 crore, out of the ₹25,000 crore earmarked for 13 PSBs for the current fiscal. Of this, 75% has already been released to them. — PTI
