Late, But A Good First Step

Late, But A Good First Step

- Raghu Mohan

AT LONG LAST, the Centre has decided to grease the skids. The move to infuse Rs 2.11 lakh crore in capital into state-run banks will help take care of two issues — provide for badloans on their books and take a hair-cut if needed; and when the time is opportune, be able to lend to viable projects. Of the Rs 2.11 lakh crore, the lion’s share will be front-loaded through re-capitalisation bonds (recap-bonds) of Rs 1.35 lakh crore; Rs 76,000 crore through Budgetary support and equity raised from the bourses. These amounts, it is hoped will cover for both current dud-loans (and hopefully, fresh slippages); and capital needs under Basel-III norms which kick in from 2019.