NEW DELHI: With the public-sector banks set to receive more capital, the fund flow to the small-scale sector should also go up, which in turn would fire up the growth engine and create jobs, according to finance minister Arun Jaitley.
Speaking at the first PSB Manthan in Gurugram on Sunday, the minister said, “If you look at the big picture of the economy where governments are spending a lot of public money, a lot of foreign investment is coming in. We need the third engine (private investment) also to fire and a robust private sector and MSME sector so that the optimum growth rate which we have the potential for can be reached.”
The government had recently unveiled a Rs 2.11 lakh crore roadmap to strengthen the bad loans-hit public sector banks. The two-year roadmap includes recapitalisation bonds, budgetary support and equity dilution. The finance minister said the government has decided to put in more capital through bonds and banks’ equity expansion and “therefore, it is the country which is virtually going to pay to keep the banking system in good health”.
Meanwhile, Financial Services Secretary Rajiv Kumar said the banks are not going to get easy money as part of the Rs 2.11 lakh crore recapitalisation plan of the government. Kumar added the Rs 1.35-lakh crore recapitalisation bonds would be front-loaded and the contours of the bonds were being decided at the
level of the finance minister.