Setting realistic performance targets key to PSU bank recapitalisation

Targets set during the previous recapitalisation plan were too high, and banks weren't able to achieve them

The prime challenge for the Union government for its ambitious Rs 2.11 trillion recapitalisation plan would be to release funds to ailing public sector banks based on achievable performance standards.

The Union government may link capital infusion with performance targets to be met out by the banks. These parameters may include: rationalisation of branches, strict monitoring of large value loans, customer services standards, among others, as per a news report in The Economic Times.

Finance Minister Arun Jaitley had said, while announcing a Rs 2.11-trillion capital plan over two years in public sector banks, which includes Rs 1.35 trillion through recapitalisation bonds,