BSD Banking Annual 2017: A new lease of life for public-sector banks

While recapitalisation will put public sector banks back on the growth path, governance reforms will be critical for a genuine turnaround

 The government’s Rs 2.11 trillion recapitalisation programme for public sector banks (PSBs) will solve many problems, but one crucial question remains: will PSBs fall back on their old ways and will the cycle repeat itself?
 
While PSB executives and analysts say the equity infusion has been substantial since 2015-16, it is tied to their turnaround plans, which are being closely monitored by the finance ministry. The finance ministry refused to release 25 per cent of the  allocated capital, as none of the 13 banks could meet the targets that were set in 2015-16 as part of the Indradhanush plan.