The Central Government on January 24, 2018, unveiled details of the recapitalisation of debt laden Public Sector Banks (PSBs) announced on 24 October, 2017. The Union finance minister had announced capital infusion of massive Rs. 2.11 trillion in October 2017.
-The capital infusion plan for 2017-18 includes Rs.80,000 crore through Recap Bonds and Rs.8,139 crore as budgetary support.
-The reform plan is based on the recommendations made at the PSB Manthan held in November, 2017 involving senior management of PSU banks and representatives from Government.
-This plan addresses regulatory capital requirement of all Public Sector Banks and provides a significant amount towards growth capital for increasing lending to the economy. The new plan says that the overarching framework for the reforms agenda is “Responsive and Responsible PSBs”.
-The recapitalizaton plan is accompanied by a strong reforms package across six themes incorporating 30 action points.
Six themes of bank recap: The PSBs have to focus on six following themes:
- Customer responsiveness,
- Responsible banking,
- Credit off take,
- PSBs as Udyami Mitra,
- Deepening financial inclusion & digitalisation and
- Developing personnel for brand PSB.
EASE Agenda: The reform agenda is aimed at EASE, which means – Enhanced (E) Access (A) and Service (S) Excellence (E).
Other features of recap plan
-Recapitalization by the Government is contingent on performance of PSBs on the reform.
-Whole Time Directors of PSU banks would be assigned theme wise reforms for implementation. Their performance in this regard would be evaluated by the bank Board.
– A survey by an independent agency in respect of EASE would be conducted to gauge public perception about improvements in access and service quality. This survey shall be made public each year.
-According to the Union Government, the recap & reform agenda is sharply focused on strengthening public sector banks, increasing lending to Medium, Small and Micro enterprises and making it easier for these and retail customers to transact as well as significantly increasing access to banking services.
-This plan includes a commitment to banking services within 5 kms of every village, refund within 10 days of any unauthorised debit in electronic transactions, a mobile App for locating banking outlets and a mobile ATM in every undeserved district.
