Budget 2019: Rs 70,000 crore capital for PSBs; FM Sitharaman says will 'boost credit for a strong impetus to the economy'

As expected, Finance Minister Nirmala Sitharaman announced further capital infusion for public sector banks (PSB) during Budget 2019 speech. She said, "Having addressed legacy issues, Public Sector Banks are now proposed to be further provided Rs 70,000 crore capital to boost credit for a strong impetus to the economy."

Sitharaman pointed out that, financial gains from cleaning of the banking system are now amply visible. Government has smoothly carried out consolidation, reducing the number of Public Sector Banks by eight. 

Meanwhile, NPAs of commercial banks have reduced by over Rs 1 lakh crore over the last year, record recovery of over Rs 4 lakh crore due to IBC and other measures has been effected over the last four years, provision coverage ratio is now at its highest in seven years, and domestic credit growth has risen to 13.8%. 

At the same time, Sitharaman also says, as many as six Public Sector Banks have been enabled to come out of Prompt Corrective Action framework. 

Hence, apart from Rs 70,000 crore capital, to further improve ease of living, Sitharaman says, " they will leverage technology, offering online personal loans and doorstep banking, and enabling customers of one Public Sector Bank to access services across all Public Sector Banks"

Additionally, government will initiate steps to empower account holders to remedy the current situation n which they do not have control over deposit of cash by others in their accounts. Reforms will also be undertaken to strengthen governance in Public Sector Banks, Sitharaman adds. 

Capital infusion to the tune of Rs 2.87 lakh crore in PSBs have been carried in past three years.