Recapitalisation sans reform

Govt should focus on changing how PSBs are run

In what amounts to an admission that the Reserve Bank of India’s prompt corrective action (PCA) framework cannot at the moment be diluted, the government has sought approval from Parliament for supplementary grants worth Rs 410 billion that it will use to infuse additional capital into public sector banks (PSBs) with weak balance sheets. The government, which is concerned that the lending slowdown will affect investment and growth in the run-up to the Lok Sabha elections, is hoping some of these banks will be able to exit the PCA framework and resume lending. In the Union Budget for this fiscal