(FE)
Faced with little choice but to boost faltering demand through greater credit flow, finance minister Nirmala Sitharaman on Friday announced an “upfront” capital infusion of the budgeted Rs 70,000 crore into public-sector banks (PSBs) in FY20, departing from the practice of doing it in phases throughout the fiscal. The finance ministry expects the move to spur additional lending of as much as `5 lakh crore by state-run banks to critical sectors of the economy, including small businesses and non-banking financial companies (NBFCs), that have been gasping for liquidity.
Finance secretary Rajiv Kumar said the distribution of the proposed capital among PSBs will be finalised soon. The state-run National Housing Bank will also offer an additional `20,000 crore to eligible housing finance companies (HFCs) — some of which are facing an asset-liability mismatch — in its financial year through June 2020 to shore up liquidity. This is on top of an extra Rs 10,000 crore the NHB had announced for HFCs earlier this month for retail loans in the affordable housing segment.
To expedite the decision-making process and prevent harassment for genuine commercial decisions by bankers at a time when several senior bankers have been accused of being complicit in frauds, the Central Vigilance Commission has issued directions that the Internal Advisory Committee in banks will classify cases as vigilance and non-vigilance.
