PSU Bank Recapitalization - Is it desirable ?

#1
The news item that kicked up all the PSU banks by about 10% almost across the board :

In growth push, Jaitley draws up Rs 70,000 cr capital infusion over 4 years

Is it really desirable ?? I mean all that will happen is that the politicians will have more room to declare "free" loans and loan waivers and election promises. To me this seems to be a sure recipe to increase the banks' NPAs and distribute political largesse.

Infusing more funds does not make the banks more efficient. PSU banks today offer the same services. There are different banks because earlier they used to be private banks till they were nationalised. Today if you see the services provided by any PSU bank, say Bank of Baroda and Union Bank, you will find the same schemes and rates and policies - as will 20 other PSU banks. It's all a huge inefficient setup and now they are going to fund it with the public's money so that they can make more funky election promises and finally give the money to their preferred industrialists.
 

TraderRavi

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#2
The news item that kicked up all the PSU banks by about 10% almost across the board :

In growth push, Jaitley draws up Rs 70,000 cr capital infusion over 4 years

Is it really desirable ?? I mean all that will happen is that the politicians will have more room to declare "free" loans and loan waivers and election promises. To me this seems to be a sure recipe to increase the banks' NPAs and distribute political largesse.

Infusing more funds does not make the banks more efficient. PSU banks today offer the same services. There are different banks because earlier they used to be private banks till they were nationalised. Today if you see the services provided by any PSU bank, say Bank of Baroda and Union Bank, you will find the same schemes and rates and policies - as will 20 other PSU banks. It's all a huge inefficient setup and now they are going to fund it with the public's money so that they can make more funky election promises and finally give the money to their preferred industrialists.
the required amount as per experts is 180000 crore vs govt promising only 70k cr , is it negative sentiment for banks ?
 
#3
the required amount as per experts is 180000 crore vs govt promising only 70k cr , is it negative sentiment for banks ?
The "required" amount is speculation, with some calculations to justify it. I bet they have calculated it against the extra revenue earned by increasing the excise duty on petro products.

Why don't the "experts" recommend amalgamation of the PSU banks ? It will reduce a lot of duplication and also substantially reduce the "required" amount.
 

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