Government banks will get help, government can give money soon
The good news may soon be available for public sector banks. It is reported that the government is planning to put 20 thousand crore rupees in these banks. In this case, banks’ stocks can be seen to rise.
Large scale loan may default: Actually due to Corona there is a possibility of large-scale loan default. However, till now the Supreme Court has stayed the default on the new loan. Due to which banks are not able to declare it. The case is scheduled to be heard in the Supreme Court on 14 December. As soon as the court removes its order from it, the list of large scale defaults will come immediately.
Keeping this default in mind, the government will infuse an amount of 20 thousand crores in public sector banks. In case of loan default, banks will have to make more provisions as per the Reserve Bank of India (RBI) rules. That is, the bank will have to keep an undisclosed amount in favor of the default. This will put pressure on banks. According to sources, the government is about to get the approval of Parliament in this matter. It will get approval for additional expenses.
According to the first batch of supplementary demand for 2020-21, the government may seek approval for an additional expenditure of Rs 2.35 lakh crore.
The government poured money in September: The government had earlier poured money into banks in September 2019. At that time the government gave a huge amount of 70 thousand crores rupees to the banks. For the last few years, the government has infused Rs 3.5 lakh crore in banks. Out of this, the government had poured 80 thousand crores in FY 2018 and 1.06 lakh crores in FY 2019.
There was no plan to put money this year: However, in this year’s budget, the government did not make any announcement to infuse money into banks. The government was not in a mood to put in money this year. But Corona, meanwhile, overturned the government’s plan. In September, Finance Minister Nirmala Sitamaran had said that she was planning to get the approval of Rs 40 thousand crore from the Parliament. Some money was also to be allotted for MNREGA.
Approval sought from RBI: On the other hand, on Thursday only banks have sought approval from the Reserve Bank of India (RBI). Banks have said that there are 1.10 lakh accounts that should be kept eligible. The Indian Banks Association has written such a demand to the Reserve Bank in a letter. They believe that these accounts should be restructured. If this does not happen then large-scale accounts may default. This restructuring will be based on the Reserve Bank’s August 6 circular.
One-time restructuring facility: The Reserve Bank has given restructuring facility once before 31 December under this circular. The last date for its execution is 30 June 2021. Out of this, the State Bank of India (SBI) has received applications for restructuring 40 thousand MSME loans alone. While applications for 4 thousand retail accounts have been received. According to rating agency S&P Global, the bad loans of Indian banks, or NPAs, may remain 10–11% by March 2022. It was 8% in June 2020. Corona is feared to be stuck on a large scale due to debt.
