Budget 2019: Centre to infuse Rs 70,000 crore into public banks in FY20

To further increase digital payments she announced establishments with annual turnover of more than `50 crore to offer low cost digital modes of payments to their customers at no charges. 

Published: 06th July 2019 11:43 AM  |   Last Updated: 06th July 2019 12:22 PM   |  A+A-

Rs 2000, cash,money

Image used for representational purposes.

Express News Service

MUMBAI: Outlining the achievements in the banking system over the last year in terms of bringing down NPAs, increasing provision coverage, public sector banks consolidation, Finance Minister Nirmala Sitharaman announced additional capital infusion into PSBs that would help them to lend more.

“Having addressed legacy issues, Public Sector banks are now proposed to be futher provided `70,000 crore capital to boost credit for a strong impetus to the economy,” Sitharaman said in her maiden budget speech. Though this is lower than the `1.06 lakh crore PSBs received last fiscal, government as the owner had provided `2.5 lakh crore in capital to PSBs since FY 15.

“The fresh capital should help the few public sector banks that are currently below the minimum tier 1 capital requirement of 8 per cent (FY20) to meet the minimum capital norms, ensure additional aging provisions in the absence of speedy resolutions of stressed assets, and probably leave some growth capital for themselves,” said  Dr. Sunil Kumar Sinha of India Ratings. 

ALSO READ: How will Budget 2019 help the aam aadmi?

In a move akin to the earlier banking cash transaction tax, Sitharaman introduced tax deduction at source of 2 per cent on cash withdrawal exceeding Rs 1 crore in a year from a bank account.

To further increase digital payments she announced establishments with annual turnover of more than Rs 50 crore to offer low-cost digital modes of payments to their customers at no charges. “To further improve ease of living, they (PSBs) will leverage technology, offering online personal loans and doorstep banking, and enabling customers of one PSB to access services across all PSBs,” she said.

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