Photo: BloombergNew Delhi/Mumbai: The government on Wednesday formally kicked off banking reforms, linking Rs88,000 crore of capital infusion in ailing public sector banks with a set of performance metrics. Addressing a press conference, finance minister Arun Jaitley said the need for banking reforms is independent of the government’s stated objective of encouraging consolidation in the banking sector. Public sector banks will be capitalised in the current fiscal year through a mix of recapitalisation bonds (Rs80,000 crore) and direct infusion from budgetary allocations (Rs8,139 crore). The recapitalisation bonds will be of a tenor of 10-15 years and will be issued once the boards of banks commit to the banking reforms. The recapitalisation bonds will not impact the fiscal deficit this year, said Subhash Chandra Garg, secretary, department of economic affairs.

Source: Mint January 24, 2018 11:26 UTC