credit 25. 0 services large industries msme 26. 7 20. 0 15. 0 12. 4 10. 0 12. 4 5. 0 may 2018 mar 2018 jan 2018 nov 2017 sep 2017 jul 2017 may 2017 mar 2017 jan 2017 nov 2016 sep 2016 jul 2016 may 2016 mar 2016 jan 2016 nov 2015 sep 2015 jul 2015 may 2015 mar 2015 - 5. 0 jul 2018 1. 6 0. 0 - 10. 0 source : reserve bank of india there is also a call for more lending by pca banks to large industries where the overall credit growth remains muted. note that many of these industries are heavily indebted to start with and are going through a deleveraging process under the ibc ( so that at present, their sectoral capacity is still somewhat in excess and credit demand itself weak ). the key point is that pca banks are de - risking the asset side of their balance sheets by moving away from riskier sector loans to less riskier ones and government securities ; the first and foremost priority is to limit ( effectively, taxpayer ) losses at pca banks and prevent further erosion of their capital. conclusion let me conclude. i have tried to explain why adequate bank capital is critical to fortify bank balance - sheets and a key indicator for the bank supervisors to closely monitor ; and, how the prompt corrective action ( pca ) framework is employed internationally by bank supervisors and regulators as an accepted form of structured early intervention and resolution, designed to help banks regain health by preserving capital. i then briefly explained the primary features of the reserve bank ’ s pca framework, which is an essential element of its apparatus for safeguarding overall financial stability. the evidence i presented suggests that without the pca imposition, some banks would have incurred even higher losses and required even more of taxpayer money for recapitalisation. imposition of pca can thus be seen as first, stabilising the banks at risk, and then, undertaking the deeper bank reforms needed for long - term viability of the business model of these banks. it is important, therefore, that the pca framework to deal with financially weak banks is persisted with. any slackening of the approach in the midst of required course action is an all too familiar and ultimately harmful habit that we must eschew. well begun is only half done, as they say! references acharya, viral v. ( 2017 ) “ the unfinished agenda : restoring public sector bank health in india, ” r k

pioneered in europe in the late 1960s has benefited immensely from the financial flexibility offered by the debt market by reducing over - reliance on the banking system. however, the european economy has also got the advantage of an enabling investment environment before the reliance on banking system could be lowered. 10. the current state of financial market in india does not support an optimal capital structure in financing infrastructure. while the public - sector debt market is fairly liquid, constituting approximately 35 per cent of gdp, the stock of listed non - public sector debt is an abysmal 2 per cent of the gdp ( goldman sachs, 2007 ). this is far below the depth of the equity market capitalisation placed almost at 100 per cent of gdp. even emerging countries such as malaysia, korea, and china have a higher percentage of corporate bonds to gdp. further, segmentation in gilt securities failed to create a credible benchmark to price other long - term securities in india despite an intensive effort by the rbi to consolidate the issuance of gilt securities. accordingly, there is a tendency to adopt lopsided structures in the form of over - reliance on equity. while the government uses tax revenues and psus surplus to fund infrastructure, a large percentage of capital requirements in the private sector too are met through equity. of the total expenditure of the eleventh plan, nearly 52 per cent is likely to be financed through internal accrual / equity primarily appropriating the internal and extrabudgetary resources of the psus. for private sector, the share of debt is relatively less at 30 per cent. 11. of the total debt requirement at rs. 9, 88, 035 crore ( usd 247. 01 billion ), the actual availability during the eleventh plan period is estimated to be around 83. 5 per cent. more than half of the total estimated resource flows are likely to come from bank credit, while close to 15 per cent is estimated to come from external commercial borrowings. the resource flow from pension / insurance companies, which is potentially a high source of long term debt, is expected to provide resources by less than 7 per cent. understandably, these institutions have been restricted by their respective regulatory authorities from exposing them too highly to the infrastructure sector on prudential considerations. 12. the credit extended by commercial banks is also restricted through exposure norms besides a cash reserve and statutory liquidity ratio requirements. although often argued for more flexibility, it needs to be appreciated that for credit institutions, it would be difficult to