RECAPITALISATION OF BANKS:
Finance Minister in their budget 2014-15 raised recapitalization of the bank.Recapitalization of banks could also be high on the priority list of the government. Stressed assets of Indian banks amount to 10 per cent of total bank loans.
According to Reserve Bank of India (RBI) estimates, the total quantum of stressed assets, that includes non-performing assets, is about Rs 10,00,000 crore.
There is a possibility that the government might set up a fund that buys out stressed assets of banks, freeing them up to lend. The UPA government had allocated Rs 11,000 crore for bank recapitalisation in the interim Budget for 2014/15, lower than the Rs 14,000 crore in 2013/14 and further allocations are unlikely in the revised 2014/15 Budget.
State-owned banks could be encouraged to raise capital from the equity markets. Some 86 per cent of NPAs are with state-owned banks.
