Lok Sabha Question No. 3386 (UNSTARRED), answered on 2019-12-09
Subject: Package to PSBs
Ministry: FINANCE
Asked by: Pritam Gopinath Munde, Chandra Sekhar Sahu

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 3386

TO BE ANSWERED ON THE 9 TH  DECEMBER 2019/ AGRAHAYANA 18, 1941 (SAKA)

## Package to PSBs

## 3386. DR. PRITAM GOPINATHRAO MUNDE: SHRI CHANDRA SEKHAR SAHU:

Will the Minister of FINANCE be pleased to state:

(a) whether  the  Public  Sector  Banks  (PSBs)  are  facing  finance  crisis  and  unable  to provide funding to micro, small and medium enterprises, if so, the details thereof and the reasons therefor;

(b) whether PSBs are needed share capital for lending and revive investment which are crucial for job creation in the economy, if so, the details thereof;

(c) whether the Central Government has studied the reasons which are responsible for going PSBs into debt, if so, the details thereof;

(d) whether the Central Government has announced the package to strengthen ailing PSBs, if so, the details thereof; and

(e) the steps taken by the Central Government to ensure that PSBs may not go in the bad debt?

## ANSWER

## THE MINISTER OF STATE FOR FINANCE (SHRI ANURAG SINGH THAKUR)

(a) to (e): As per RBI data, MSME credit outstanding of Public Sector Banks (PSBs) has increased  by  Rs.  1,25,759  crore  from  Rs.  8,44,182  crore  in  September  2017  to  Rs. 9,69,941 crore in September 2019.

Capital infusion by the Government in the banks in the current financial year includes Rs. 60,314  crore  made  against  the  budget  provision  of  Rs.  70,000  crore  announced  for infusion  of  capital  by  the  Government  in  banks  to  boost  credit  for  impetus  to  the economy  by  having  adequately  capitalized  them.  PSBs  have  not  been  in  debt  as  their gross loans and advances during each of the last 4 financial years have been in the range of 74-78% of their total deposits.

To strengthen and improve the performance of PSBs, Government, as part of its 4R's strategy  of  Recognising  non-performing  assets  (NPAs)  transparently,  Resolution  and Recovery,  Recapitalisation  and  Reforms,  has  taken  steps  to  improve  the  conditions  of PSBs.  Stressed  assets  were  recognised  transparently  as  NPAs  and  expected  losses  on stressed  loans  were  provided  for  and,  further,  schemes  for  restructuring  stressed  loans were  withdrawn.  To  improve  resolution  and  recovery,  the  Insolvency  and  Bankruptcy Code was enacted and  number of recovery related reform measures effected,  enabling recovery by PSBs of Rs. 4,05,158 crore over the period from April 2014 to September 2019, including record recovery of Rs. 1,27,987 crore during the last financial year. To recapitalise PSBs, Government infused Rs. 3,13,301 crore in PSBs since April 2014 and, in  addition,  PSBs  have  mobilised  Rs.76,123  crore  from  the  markets.  Reforms  were effected  for  Enhanced  Access  and  Service  Excellence  (EASE)  under  a  PSB  Reforms Agenda,  which  aimed  at improving  customer  responsiveness, deepening financial inclusion and digitalisation, serving MSMEs better, and enabling credit off-take, besides improved governance, prudential lending, better risk management and technology-driven checks and controls.

By  addressing  the  underlying  causes  behind  the  build-up  of  stress  in  PSBs  through comprehensive  reform,  the  risk  of  recurrence  of  excessive  stress  in  PSBs  has  been minimised and PSBs have emerged stronger. Positive impact on PSBs of Government's 4R's appro ach is visible and includes, inter alia¸ the following:

- (i) Assets quality has improved as reflected in 45% year-on-year reduction in slippage into NPAs in FY 2018-19, and 58% reduction in 31 to 90 days overdue corporate accounts by June 2019 from their peak in June 2017.
- (ii) Provision  coverage  ratio  has  risen  steadily  from  49.31%  at  time  of  AQR  to  a healthy level of 75.6% in June 2019.
- (iii) With substantial cleaning up accompanied by capitalisation of banks, the domestic credit growth of PSBs has risen to 10.2% in FY 2018-19.

Note: In the reply, the figures for PSBs include those for IDBI Bank Limited, which has been recategorised by RBI as a private sector bank with effect from 21.1.2019.