Here is today’s important banking news to keep you updated and help you prepare for IBPS and other bank exams:
Important Banking News: Government to Infuse Rs. 5,000 Crore in PSU Banks
- Government will infuse about Rs. 5,000 crore capital in the public sector banks in the current fiscal to strengthen balancesheet.
- “As committed, banks will get fund infusion in the fourth quarter. Banks will get about Rs. 5,000 crore,” Financial Services Secretary Ajuly Chib Duggal said on the sidelines of an event here.
- Funds would be infused after Parliament approves third Supplementary Demand for Grants in the upcoming Budget session.
- Last year, the government announced a revamp plan ‘Indradhanush’ to infuse Rs. 70,000 crore in state-owned banks over four years, while they will have to raise a further Rs. 1.1 lakh crore from the markets to meet their capital requirements in line with global risk norms Basel III.
- As per the blueprint, PSU banks will get Rs. 25,000 crore this fiscal and also in the next fiscal. Besides, Rs. 10,000 crore each would be infused in 2017-18 and 2018-19.
- Of the Rs. 25,000 crore earmarked for 2015-16, the government has pumped in about Rs. 20,088 crore in 13 public sector banks so far.
- Talking about various initiatives taken by the government to deepen social security net, Duggal said banks are addressing last mile connectivity issues.
- The Department of Financial Services is having discussion with banks on regular basis to sort out the issues as soon as possible, she said.
- Banks like SBI and Andhra Bank are currently addressing issue of internet connectivity in the 800 identified areas.
- Besides, steps are being taken to strengthen internet connectivity in various parts so that Direct Benefit Transfer (DBT) is made seamless.
Important Banking News: RBI’s 5% Inflation Target a Challenge: Moody’s
- RBI’s target to bring down retail inflation to 5 per cent by March 2017 will face some risks from monsoon uncertainty and execution of 7th Pay Panel recommendations, while macro-economic factors will be critical for sustaining growth, Moody’s Investors Service said on Tuesday.
- It also said that a growth-oriented forthcoming budget, while controlling inflation at the same time, will help support the country’s sovereign credit rating.
- The Reserve Bank expects retail inflation to be around 6 per cent in January 2016 and lower further to 5 per cent by March 2017.
- “The budget announcement at the end of February should offer some insight into the Pay Commission implementation, other fiscal measures and their likely impact on growth and inflation.
- “If they are successful in promoting growth, while keeping inflation in line with targets, the combination would support the sovereign credit profile,” Moody’s Investors Service Associate MD (Sovereign Risk Group) Atsi Sheth said.
- Sheth said uncertainty will prevail on monsoon until the middle of calendar year.”Because of the links between weak monsoons and high inflation, monsoon uncertainty will likely constrain monetary policy in 2016, even as subdued global growth poses headwinds to India’s economic recovery,” she said.
- Sheth said this target faces some risks from the implementation of the Pay Commission recommendations and if 2016 is a third consecutive year of weak monsoon.
- In its final monetary policy for current fiscal, RBI on Tuesday left the key policy rate unchanged but indicated at accommodative stance saying with “inflation moving closer to the target” there would be more room for rate cut to support growth.
- Sheth said RBI’s statement underscored that macro-economic stability – as reflected in inflation, fiscal deficit and current account deficit trends – holds the key to sustaining India’s growth at a higher level.