The Center on Monday demanded a parliamentary proposal to spend Rs 20,000 crore of capital in public sector banks in this financial year, which ends in March 2021. The move aims to support lenders against the increase in bad loans by the Reserve Bank of India. Due to the coronavirus epidemic and related restrictions. The decision to recapitalize the banks has come at a time when the banking sector of the country is already suffering thousands of crores of rupees due to low loan fluctuations and fraud, which is affected by the spread of COVID-19.
The government sought Parliament’s approval for a total additional expenditure of Rs.2.35 lakh crore for the current financial year (2020-2021), including a cash out of Rs1.6 lakh crore, mainly to deal with the coronovirus epidemic. To meet expenses for.
The government has directed banks and other financial institutions to implement their debt resolution schemes for eligible accounts battling stress due to the epidemic by 15 September.
In its budget for 2020-21, it avoided putting any capital in state-run banks in its budget for 2020-21. The Center had proposed to infuse Rs 70,000 crore in PSU banks in 2019-20 to boost credit and drive economic growth.
Last week, Finance Minister Nirmala Sitharaman said that the banks were going to be catalysts for economic revival, stressing that all the officials in the sector should know the details of government schemes which are to be implemented.
According to the report, the outcome of the coronovirus epidemic, from at least 12.5 percent in March 20 to 5.5 percent in March 2012, could increase the proportion of gross non-performing assets – or bad debts – in the country’s banking system. By the Financial Stability and Development Council of RBI, released in June.
The government has already given a pump of Rs 3.5 lakh crore in the last five years. This has reduced the number of state-run lenders to strengthen the already ailing sector.
This year, a mega merger plan to combine 10 state-run lenders into four came into effect, as part of the government’s ambition to make India a $ 5-trillion economy by 2025.
However, the country’s GDP plummeted to a record 23.9 percent in the quarter ended June 30, as the coronovirus epidemic crushed demand in an already slowing economy, keeping it away from those ambitions.