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7:05 pm - Saturday March 25, 2017

Capital Support to Banks

The Central Government in continuation for the third year decided to give capital infusion to 10 nationalized public sector banks to the tune of Rs.12,517 crores in the 2012-13. In the past two years in 2010-11 Rs.20,117 crores and in 2011-12 Rs.12,000 were provided.

The three year monetary support has mounted Rs.44,634 crores so far. The Government has also assured these bank of further support of Rs.5 lakh crores in next five period upto 2018-19.

The banks have disbursed the loan in huge quantities in the consumer sectors for the purchase of the car, trucks, 2-wheelers and residential homes. But the repayment of loan in monthly or yearly installment are not forcoming as required to be. Mr.Pratik Chaudhary CMD of the State Bank of India has admitted high prices and inflammation have adversely affected the repayment capabilities of the creditors. Because of high prices the saving capacities of the people are also badly affected. The deposits with the banks also on low key.

Due to high bank lending rates the industries are also not in a position to avail it, this resulted in lack of big and assured customers with banks. The industrial growth rate is at the lowest and manufacturing sector facing glut in stocks particularly of durables.

The Reserve Bank is applying Rule 3 of BASEL on banks which requires bank to keep curtain amount in proportion as safe to meet certain contingencies like global recession and other unforeseen financial eventualities.

Is the recession few years back even the mighty financial institutions and Banks of America were on the verge of insolvency. The US Administration came to its rescue with budgetary support and packages.

The Government of India and the Reserve Bank of India are insulating public sector banks against all financial risks.
But the industries are the strong and viable customers of the banks. Its lending rates must be cheap for industrial progress and constant growth. The industry and the Bank sustain each other.


Founder : Late Shri Ramgopal Maheshwari

Posted in: Editorial

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