Youth destination IAS

Recapitalization of Banks

Share with Your Friends

Print Friendly, PDF & Email

Recapitalization of Banks

In a recent working paper released by RBI, the balance between the benefits to banks from the recapitalization of banks by the government and reduction in government expenditure in the social sector has been emphasized.

  • In this working paper of RBI, in view of the “Black Swan Event”, a cautious approach to recapitalization of banks has been emphasized.
  • Bank recapitalization refers to infusion of more capital into Public Sector Banks (PSBs), so that they are able to meet the capital crunch as well as comply with Basel norms. The Reserve Bank of India (RBI) has set capital adequacy norms for banks based on Basel norms. This step is mainly taken to ful-fill these guidelines of RBI.
  • Under this process, the government infuses capital into banks by buying new shares of PSBS or issuing bonds. The Government of India is also the largest shareholder in PSBs.
  • Most of the public sector banks often struggle to deal with the problem of NPAS (Non-Performing Assets). In such a situation, the government keeps on announcing recapitalization from time to time to keep the banks from sinking.
  • Earlier, in October 2017 and 2019, bank recapitalization programs were announced.

Key findings of this working paper of RBI:

  • Offering better and discounted lifetime benefits to companies or firms through these recapitalization packages can have their advantages. But, due to this, poor families may have to suffer the loss of government spending in social sectors.
  • Therefore, in the working paper, the need to balance this pros and cons in public policy making has been emphasized.

Source – The Hindu

Download Our App

MORE CURRENT AFFAIRS

Register Yourself For Latest Current Affairs

May 2022
M T W T F S S
« Apr    
 1
2345678
9101112131415
16171819202122
23242526272829
3031  

Mains Answer Writing Practice

Recent Current Affairs (English)

Current Affairs (हिन्दी)

Subscribe Our Youtube Channel

Click to Join Our Current Affairs WhatsApp Group

In Our Current Affairs WhatsApp Group you will get daily Mains Answer Writing Question PDF and Word File, Daily Current Affairs PDF and So Much More in Free So Join Now

Hello!

Login to your account

Open chat
1
Youth Destination IAS . PCS
To get access
- NCERT Classes
- Current Affairs Magazine
- IAS Booklet
- Complete syllabus analysis
- Demo classes
https://online.youthdestination.in/