“Owing to the stressed assets in large industries, there was a general reluctance on the part of bankers to lend to these industries, with the problem getting compounded by the pandemic,” the RBI said.
The Budget proposes to privatise two PSU banks this financial year. Why was the need felt, 51 years after nationalisation of govt-owned banks? A look at the banking sector’s concerns, and moves to address them.
In another “structural reform” intended to improve retail participation in the government securities market and to keep the cost of funds down for the central government, the RBI has proposed to allow small investors direct access to its platform.
Even as the markets kept up the momentum gained from the Union budget presented on Monday, the most spectacular movement has been witnessed in the bank index which rallied by almost 3.50 per cent in Tuesday's session compared to a 2.5 per cent rise in Sensex and Nifty.
The government slapped a freshly introduced levy called the Agriculture Infrastructure and Development cess of 2.5 per cent. The net effect will be lesser than the 5 per cent reduction that the headline number suggests.