“Additional capital is required for meeting Basel III norms. However, sufficient cushion is available for the Indian banking system. The government is committed to infusing required capital in the PSBs (public sector banks),” finance minister Pranab Mukherjee said at an event in Mumbai
Mumbai: The government will recapitalise the state-owned banks to help them tide over the problems arising out of slow economic growth, reports PTI quoting finance minister Pranab Mukherjee.
“Going forward if gross domestic product (GDP) growth slows down, there could be some impact on asset quality (of banks),” Mr Mukherjee said while addressing an event in Mumbai organised by the Indian Merchant Centre in collaboration with ICAI.
He further said the government is committed to adequately capitalising the banks and help them meet the Basel III capital requirement norms.
“Additional capital is required for meeting Basel III norms. However, sufficient cushion is available for the Indian banking system. The government is committed to infusing required capital in the PSBs (public sector banks),” the minister said.
In his Budget for 2012-13, Mr Mukherjee provided for a capital support of Rs15,888 crore to PSBs and financial institutions.
“The government is committed to protecting the financial health of public sector banks (PSBs) and financial institutions," he had said in his Budget speech.
The government has already infused more than Rs20,000 crore in 2010-11 and Rs12,000 crore in 2011-12 in various state-owned banks to help them maintain a capital adequacy ratio (CAR) of more than 8%.
High interest rates and lower economic growth has impacted the repayment capacities of borrowers, pushing up the NPAs of banks to Rs1.27 lakh crore in the first nine months of 2011-12 fiscal.
Banks’ bad loans stood at Rs94,084 crore in 2010-11, Rs 81,813 crore in 2009-10 and Rs68,220 crore in 2008-09.
The economic growth during 2011-12 slowed down to 6.9% from 8.4% a year ago. The growth for the current fiscal has been pegged at 7.6%.
An internal note circulated by chief accountant (finance) of the Brihanmumbai Municipal Corporation has revealed the nexus between corporators and petty works contractors. Despite the public uproar that the note created, the BMC had decided to go ahead with the award of the contracts
“A social audit simply requires the BMC (Brihanmumbai Municipal Corporation) to empanel top civil engineers as auditors and encourage local residents’ bodies to get involved in the process of getting all projects audited,” says India Against Corruption (IAC), in a press note. IAC has demanded that a small cost percentage (0.25% or 0.5%) of all contract value should be set aside for social audit, and all proposed works should be verified beforehand.
While the demand for public audits has been voice many times over the years by citizens and activists, this time, the matter has gained prominence on the back of a note circulated by Ram Dass, chief accountant (finance), BMC. The internal note that was circulated last month revealed how corporators encouraged malpractices by contractors for ward-level civil works. At a civic standing committee meeting about ten days ago, corporators staged a walk out, protesting against the note.
IAC spokesperson Preeti Sharma Menon says, “An internal note circulated by chief accountant (finance) Shri Ram Dass, lays bare how contractors are in a nexus with ward-level officials and corporators to get orders for petty works. The root problem is the Civil Works Contract (CWC) system of awarding contracts every two years. On 16 April 2012 the contracts will be handed out for the coming two years and their approximated worth is Rs2500 crore! We, at IAC, believe that there is an immediate need to bring in checks, increase accountability and transparency and this is only possible through social audits. IAC Mumbai is going to campaign vigorously for social audits to be made intrinsic to all public works in the city, starting with the CWC.”
The organisation has also said that they are going to write to the governor and the chief minister of the state demanding a clean up of the system before awarding of contracts. The IAC press note alleges, “Those contractors that offer to fulfil the order at 12% lower than estimate are asked give as much as 60% of the cost as deposit to do business at lower rate and giving such huge deposits is not acceptable to any reputed firm.”
The internal note had raised the hackles of many corporators and politicians, with many demanding Mr Ram Dass to be more specific and name the civic authority members and the contractors who engage in corruption. Despite the public uproar that the note created, the BMC had decided to go ahead with the CWC.
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