In Past 11 Years, Centre Has Pumped Rs 2.6 Lakh Crore Into Govt-Run Banks

| February 19 , 2018 , 08:12 IST

The jeweller Nirav Modi scam of Punjab National Bank (PNB) worth Rs 11,750 crore, resulted in the stocks of the public-sector bank plummeting as it scrambles to dig itself out of the loss. Even before the PNB scam, the Centre has already pumped Rs 2.6 lakh crore into government-run banks over the past 11 years.

Finance Ministers over the past 11 years, namely, Pranab Mukherjee, P Chidambaram and Arun Jaitley, have pumped close to Rs 2.6 lakh crore into government-run entities as they needed funds to combat bad debts and corporate frauds. The amount pumped into government-run banks is more than twice the allocation of the Centre for rural development and 3.5 times the outlay for the roads ministry.

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Apart from the Rs 1.45 lakh crore allocated for recapitalisation by the Centre during this and next financial year, the banks received around Rs 1.15 lakh crore equity from 2010-11 to 2016-17. During the same period, the profits of the banks came to Rs 1.8 lakh crore with SBI and other nationalised banks reporting combined financial losses during the last two financial years.  

Considering the poor performance of public sector banks, as well as their high NPAs, Chief Economic Advisor Arvind Subramanian, among others, has called for private participation in these banks.

However, the government, including the previous Congress-led UPA and the current BJP-led NDA, have called to maintain state control in the banks so as to easily manage government schemes.

Meanwhile, public sector bankers believe that they are being hobbled by unnecessary bureaucratic restrictions which are not imposed on private sector banks, which are hampering their activities.