The Centre’s move to recapitalise public sector banks (PSBs) has resulted in a surge in credit growth, a sign of revival of private sector investment in the country, a top finance ministry official said on Saturday. Financial services secretary Rajiv Kumar said the banking sector posted a double digit growth on year-on-year basis in December 2017.
“Surge in credit growth: Sustained momentum post PSB recap decision - Banking sector posts double digit (10.7% Y- o-Y) growth in Dec’17, up from (7.2% Y-o-Y) in Oct'17, powered by #services & #retail,” Kumar tweeted. Earlier this week, Parliament gave its approval for issuance of `80,000 recapitalisation bonds to PSBs to improve their balance sheets so that their lending capacity is enhanced.
Besides, the finance ministry approved proposal for infusion of `7,577 crore in six weak public sector banks as part of the recapitalisation plan to bolster capital adequacy ratio. All these banks, which got capital support, are under prompt corrective action of the Reserve Bank of India.