Weak banks to get lion's share of Rs 881-bn recapitalisation bonds

Govt sets strict terms for banks; to bring out report card on compliance

The Centre on Wednesday announced a reform-oriented Rs 881 billion capital infusion in 20 public sector banks (PSBs), with a major chunk flowing into the weaker banks to meet their capital adequacy requirements.

The government has set strict terms for issuing the recapitalisation bonds to PSBs. The terms include creating a stressed asset management vertical, tying up with agencies for specialised monitoring of loans above Rs 2.5 billion, strict surveillance on big loan defaulters, and appointing a whole-time director for monitoring reforms every quarter, among others.

 

“The recapitalisation enables additional credit off-take capacity of PSBs by