(ET)
The government is pushing loss-making state-run banks to sell their riskier assets to larger peers, such as SBI, to reduce the capital requirement of public sector lenders, that have been hit hard by the RBI’s latest norms on provisioning for bad debt.
Sources told that banks that are part of the RBI’s prompt corrective action (PCA) plan are being advised to get rid of more risky assets, which are loans to companies with weak finances. This is because the finance ministry has ruled has ruled out any fresh fund infusion beyond the Rs 65,000 crore that was announced as part of the Rs 2.1-lakh-crore re-capitalisation plan.
In addition, lenders are being pursued to aggressively sell non-core holdings, including stakes in mutual funds and insurance arms as well as real estate assets — some of which are in prime locations across the country.
