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4:18 am - Tuesday November 21, 2017

Govt to infuse Rs 2.11 lakh cr in PSBs

Will invest 6.92 lakh cr in road constructions

Agencies, New Delhi

In a bid to give a major boost to economy and generate huge employment, the Government on Tuesday decided to recapitalise banks by Rs 2.11 lakh crore in next 2 years and invest 6.92 lakh crores in the next five years to construct 83,677 km roads in the country.

Addressing a press conference here after Cabinet meeting in the morning, Finance Minister Jaitley said the infusion of this huge amount will enable Public Sector Banks (PSBs) to lend more at reasonable rates which in turn would give a boost to the economy.

He said that the GDP growth was poised for take off and has been around 7.5 per cent in the past three years. The IMF forecast is also of 8 per cent growth rate. On the recapitalisation of PSBs, he said, ‘’Of Rs 2.11 crore, Rs 1.35 lakh crore will come from recap bonds, while 76,000 crore will be pooled in from other sources.’’

Mr Jaitley said that apart from infusing this huge amount, the government will carry forward the reforms in the banking sector to check the indiscriminate lending which created the present Non Performing Assets (NPAs).

Giving details of the government decisions, Mr Jaitley said a series of steps were being taken to sustain growth momentum in the country. He said that macro economic fundamentals of the country were strong enough to face challenges.

Mr Jaitley, in presence of top Finance Ministry officials, said that a comprehensive review of the economy and various sectors has been undertaken by senior Finance Ministry officials during which Prime Minister Narendra Modi was also present.

Top Finance Ministry officials made detailed presentation containing the analysis and the road ahead. Mr Jaitley blamed the previous government for the creation of NPAs and said that it all happened due to indiscriminate lending without taking care of the repaying capacity and other factors.

“Between 2008 and 2013, public sector banks engaged in indiscriminate lending which led to the rise in non-performing assets (NPAs). NPAs were kept under the carpet for long but the situation is now improving. “Public sector banks are flush with funds after demonetization,” said the FM. Mr Jaitley said that the Cabinet felt the government should take a bold step to address the issue of inadequate lending.

“We will make reforms in the banking sector so that it does not happen again,” he added. On the nature of recap bonds, Finance Minister said that the details of it will be worked out in due course taking care of fiscal deficit and other parameters of the economy.

 

Posted in: Featured, Nation

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