Union Minister of State for Finance Jayant Sinha on Friday said the government will stand by the banks and ensure that they maintain capital adequacy norms as laid out by Basel III and the Reserve Bank of India.
“As far as capital adequacy of the banks is concerned, we have been in close collaboration with the RBI to work out those capital requirements and we will fully support our banks,” Sinha said.
“We are looking at all measures to ensure that there is sufficient liquidity and that we are able to support what is required as far as budget is concerned. As part of Indradhanush, we have already laid out exactly how the capital support will flow out to the banks, we have said that we will provide Rs 25,000 crore in this fiscal year and an additional Rs 25,000 crore next fiscal… so we are obviously working with the banks to ensure that they have adequate capital to meet all their capital requirements,” Sinha said.
On the issue of Masala bonds, he said that it is important to see how that market develops. “There have already been series of issuance of masala bonds and there have been serious turbulence now in the global capital markets as those markets strengthen and recover, I am sure masala bonds will do well.”
He also remained optimistic about rise in consumer spending. “Spending will pick up, the effects of 7th Pay Commission will come into force sometime in the next fiscal year, as it is if you look at consumption and sectors of the economy linked to consumption be it hotels, airlines, consumer packaged goods are actually doing quite well.”
Talking about IDBI Bank’s QIP (qualified institutional placement) proposal, Sinha said, “IDBI is going through a QIP process, we have already said that we are open to having a discussion with strategic investors as far as IDBI is concerned… so let us see how the QIP book building process unfolds and there as part of that we will be happy to discuss with potential strategic investors as to how transformation of IDBI should be undertaken.”
He said that a real estate regulator is required to see how financing is going to work through the real estate markets. “That bill is pending in Parliament. As the bill goes through, those norms can be established.”