Lok Sabha Question No. 984 (UNSTARRED), answered on 2016-04-29
Subject: Bank Profit/Losses
Ministry: FINANCE
Asked by: K. GOPAL

## 984. DR. K. GOPAL:

Will the Minister of FINANCE be pleased to state:

- (a) whether it is true that since most public sector banks provided only 50 per cent of their performance that was mandated by Reserve Bank of India (RBI) in third quarter similar provisioning is required in the Fourth quarter too, if so, the details thereof;
- (b) whether it is also true that as a result of mounting losses, the capital position of the public sector banks have deteriorated and the rating agency said it is likely to be difficult for these banks to raise funds from the non-government sources, if so the details thereof;
- (c) whether  the  Government  has  assessed  the  highest  level  of  stress  which  is  likely  to  significantly impact earning and solvency profile of PSBs over the next two or three years, if so, the details thereof; and
- (d) the measures taken by the Government to improve earning and solvency profile of PSBs?

## ANSWER

## The Minister of State in the Ministry of Finance

## (SHRI JAYANT SINHA)

(a) :  Reserve Bank of India (RBI) has conducted an Asset Quality Review (AQR) exercise under which all banks, including PSBs covered under AQR, were asked to make at least 50% provision for the accounts identified as NPA under AQR in December 2015 quarter and the rest in March 2016 quarter.

(b) to (d) :  To keep PSBs adequately capitalised following measures have been taken:-

The PSBs have been allowed to raise capital from Public markets by diluting Government of India holding upto 52% in phased manner based on their capital requirement, their stock performance, liquidity, market conditions etc.

The Government has unveiled 'Indradhanush' plan for revamping PSBs resting on 7 pillars namely Appointments,  Bank  Board  Bureau,  Capitalisation,  De-stressing  PSBs,  Empowerment,  Framework  of accountability and governance reforms.

Under the 'Indradhanush' plan, the Government has proposed to make available Rs. 70000 crores out of the budgetary allocations during current year and next three financial years. A sum of Rs. 25,000 crore  has  been  infused  in  19  PSBs  during  2015-16  and  Budgetary  of  Rs.  25,000  crore  has  also  been made for capitalisation of PSBs during financial year 2016-17.

Further,  the  Reserve  Bank  has  recently  made  some  amendments  to  the  treatment  of  certain balance  sheet  items  (viz.  revaluation  reserves,  foreign  currency  translation  reserves  and  deferred  tax assets) for the purposes of determining banks' regulatory capital. These amendments will also help shore up the capital level of PSBs.

The measures initiated by the Government and RBI are intended to improve the capital position in PSBs. These measures should also improve the market valuations of the PSBs which in turn, will help them in accessing capital from market at competitive terms.

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## GOVERNMENT OF INDIA

## MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO.984

TO BE ANSWERED ON THE 29 th  April, 2016/ Vaisakha 9,1937 (SAKA)

## Bank Profit/Losses

## QUESTION