The government has conveyed its intention to infuse Rs 22,915 crore into 13 state-run lenders. This is good news for capital-starved banks. To what extent it will help them ensure regulatory compliance or, for that matter, expand their credit is anybody's guess.
It is estimated that public sector banks (PSB) in India will require additional capital support of at least Rs 3 lakh crore spread over three years until 2019. As the largest stakeholder in PSBs, to what extent the government will be able to meet these additional requirements amid a not-so-favourable fiscal situation is a big question. What, on the other hand, would be the response of the banks in the face of global uncertainties and market volatility?
A permanent solution lies in taking some bold initiatives and reducing the banks' dependence on the government. Ensuring greater functional autonomy and a more professional management of operations are critical for banks to achieve independence.
Srinivasan Umashankar Nagpur
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