He said one of the focus areas banks have taken up is to support MSMEs in the first instance because the sector creating jobs and giving a boost to the economy has no access to international finance or the bond market.
Jaitley said the government has decided to put in more capital through bonds and banks’ equity expansion and “therefore, it is the country which is virtually going to pay to keep the banking system in good health”.
Jaitley said the ‘system’ needs to be given a nudge towards responsible and responsive banking and added: “The steps taken in the last two years have directly impacted banking. While one is the success story of financial inclusion, the other one is digitisation. With the latter being the prime focus, more transactions will take place through banks, thus strengthening of the banking system. The goods and services tax, too, has been an enabler, as credit requirements are now clear due to greater transparency.”
NPAs of PSBs have increased to Rs 7.33 lakh crore as of June 2017, from Rs 2.78 lakh crore in March 2015. In the last three-and-a-half years, the government pumped in more than Rs 51,000 crore as capital in PSBs.
A stressed situation
Rs 2.11 lakh crore
The govt’s mega recapitalisation plan announced last month
Rs 4,72,227 cr
Net worth of PSBs as of March 2017
Rs 7,33,136 cr
Gross NPAs as of June 2017
Rs 1.4-1.7 lakh cr
PSB’s capital requirement till 2019