Government
decides in Principle to enhance the amount of Capital to be infused into Public
Sector Banks; Additional amount of Capital to be provided to enable Banks to lend
to Borrowers in selected Sectors at Lower Rates to Stimulate Demand; Expected
to Give a Boost to Capacity Addition, Employment and Production
The
Central Government has decided in principle to enhance the amount of capital to
be infused into Public Sector Banks (PSBs). It may be recalled that in the
Budget for 2013-14, a sum of Rs. 14,000 crore was provided for capital
infusion. This amount will be enhanced sufficiently.
The
additional amount of capital will be provided to banks to enable them to lend
to borrowers in selected sectors such as two wheelers, consumer durables etc,
at lower rates n order to stimulate demand. While this will bring relief to the
consumers, especially the middle class, it is also expected to give a boost to
capacity addition, employment and production.
This
decision is based on the discussions between Dr. Raghuram Rajan, Governor,
Reserve Bank of India (RBI) and the Union Finance Minister, Shri P. Chidambaram
when Dr Rajan called on the Finance Minister here today this morning.
Secretary, Department of Economic Affairs, Shri Arvind Mayaram was also present
on the occasion.
The
issue of credit growth in different sectors was discussed. At the end of
September 2013, growth of Gross Bank Credit stood at about 18 per cent, year-on-year.
However, credit growth is sluggish in some sectors leading to the conclusion
that demand in these sectors remains subdued.
Based
on the discussions, the Government has decided in principle to enhance the
amount of capital to be infused into Public Sector Banks.
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