Govt to infuse Rs70,000 capital in PSU banks this fiscal
20 November 2019
The government has made a provision of Rs70,000 crore for infusion of capital in state-run banks in the current financial year to boost credit and give fresh impetus to the economy.
Of this, around Rs60,314 crore has been infused so far, equipping banks for growth, minister of state for finance and corporate affairs Anurag Singh Thakur stated in a written reply in the Rajya Sabha on Tuesday.
Banks project their capital requirements to their respective boards in accordance with the instructions of the Reserve Bank of India, and as per RBI, such information is confidential.
The minister further stated that banks’ projections take into account all sources of capital, including government and other investors, capital receipts from sale of assets and internal accruals. Thus, in addition to the projected infusion of Rs70,000 crore by the government, banks have projections and plans for mobilising capital from other sources as well.
The minister also stated that the finance ministry has taken a number of steps to eliminate fraudulent banking practices.
Government, he said, has issued “Framework for timely detection, reporting, investigation etc. relating to large value bank frauds” to public sector banks for systemic and comprehensive checking of legacy stock of their non-performing assets (NPAs), which provides, inter-alia, that:
- All accounts exceeding Rs50 crore, if classified as NPAs, be examined by banks from the angle of possible fraud, and a report placed before the bank’s Committee for Review of NPAs on the findings of this investigation;
- Examination be initiated for wilful default immediately upon reporting fraud to RBI; and
- Report on the borrower be sought from the Central Economic Intelligence Bureau in case an account turns NPA.
The government has enacted the Fugitive Economic Offenders Act, 2018 to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts. The Act provides for attachment of property of a fugitive economic offender, confiscation of such offender’s property and disentitlement of the offender from defending any civil claim.
PSBs have been advised to obtain certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs50 crore and, decide on publishing photographs of wilful defaulters, in terms of the instructions of RBI and as per their board-approved policy and to strictly ensure rotational transfer of officials/employees. The heads of PSBs have also been empowered to issue requests for issue of Look Out Circulars.
For enforcement of auditing standards and ensuring the quality of audits, government has established the National Financial Reporting Authority as an independent regulator.
Instructions/advisories have been issued by to PSBs to decide on publishing photographs of wilful defaulters, in terms of RBI’s instructions and as per their board-approved policy, and to obtain certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs50 crore.
In order to bring transparency and accountability in the larger financial system, bank accounts of 3.38 lakh inoperative companies were frozen over the last two financial years.