Banks need Rs 1 lakh crore in 5-10 yrs: FM

Urges banks for consolidation

The Finance Minister today said that the public sector Banks would require around Rs 1 lakh crore capital over the next 5-10 years. He urged banks for consolidation.

In his address after releasing the book 'Indian Overseas Bank @ 75, the saga of good people to grow with', Union Finance Minister P Chidambaram said that the government has all intentions to capitalise banks so that it can be ahead of meeting all the norms, especially Basel norms.

By the end of March 2013, the government will infuse around Rs 15,000 crore as new capital.

"We will find all the ways to mobilise this money," he said.

The Finance Minister also urged the banks to look at consolidation. "China has three banks among top the 20 banks in the World, but India doesn't have even one.

"We need one to compete globally and for that we need a bank with strong capital and presence," said the Finance Minister.

He added that despite growing at 9% in terms of expanding the network, still the country is underbanked.

In 2011-12, banks in India collectively opened 6,489 branches -- an average of 18-19 branches a day. During the current year banks are planning to open 6,000-7,000 branches.

At present all these banks have around 70,000 plus branches, said the Finance Minister.

"Despite all the efforts, one half of India doesn't have bank accounts" said the Finance Minister.

The Finance Minister also said that the country needs all sort of banks -- co-operatives, with local flavours, with regional domination, with national foot print and banks of world size.

On the banking system, he said, "the system is strong, healthy and robust. Small ailments will not affect our robust economy. The government has attached lots of great importance to banks."

During the financial crisis, in the US around 1,000 branches collapsed, but not even one bank in India collapsed, thanks to the system, regulation and regulator.