Will bank recapitalisation fix NPAs?
Will bank recapitalisation fix NPAs? Centre plan to infuse ₹2.11 lakh crore capital over the next two years into public sector banks. 1.35 lakh cr. will be through sale of recapitalization of bonds. This sum of money equivalent to 1.25% of GDP . Indiscriminate lending earlier by banks may be the main reason for high level of NPAs. The government’s capitalisation package for public sector banks will provide a strong booster dose of relief for the capital-starved PSB’s. What are the causes of deceleration in credit growth? 1. Poor Demand Some observers that the deceleration in credit growth to poor demand. They say that corporates have excessive debt and are in no position to finance any investment. 2. Supply of Credit · PSBs, unlike their private sector counterparts, had lent heavily to infrastructure and other related sectors of the economy ...