Moneycontrol
Mar 15, 2016 08:40 PM IST | Source: PTI

Review investment in non-core business: Govt to banks

Banks have also been asked to review investments with regard to existing as well as proposed non-core banking activity, Jayant Sinha said in a written reply to the Rajya Sabha.


The government has advised PSU banks to review their investments in different non-core banking activity and take suitable necessary decisions with regard to disinvestment in existing ones, Minister of State for Finance Jayant Sinha informed Parliament.


Banks have also been asked to review investments with regard to existing as well as proposed non-core banking activity, he said in a written reply to the Rajya Sabha.


These decisions should be made by boards of public sector banks (PSBs) as per corporate governance guidelines laid out in the Companies Act, he said.


At present, public sector banks are adequately capitalised and meeting all the Basel III and RBI norms, he said.


However, the government wants to adequately capitalise all the banks to keep a safe buffer over and above the minimum norms of Basel III.


The central government proposes to make available Rs 70,000 core out of budgetary allocations for four years, Sinha added.


A sum of Rs 19,950 crore has already been infused in 13 PSBs during this financial year.


In a separate reply, Sinha said the PSBs have been allowed to raise capital from the public market through follow-on public offer (FPO) or qualified institutional placement (QIP) by diluting the government holding up to 52 per cent in a phased manner based on their capital requirements, their stock performance, liquidity, market conditions and the like.


"Further, RBI has recently made some amendments to the treatments of certain balance sheet items (viz. revaluation reserves, foreign currency translation reserves and deferred tax assets) for the purpose of determining banks' regulatory capital," he said.


These amendments are expected to help shore up the capital level of PSBs while the measures initiated by the government are intended to improve operational efficiency and governance in PSBs.


"These measures should also improve market valuations of the PSBs which, in turn, help them in accessing capital from the market on competitive terms," Sinha added.


To another question, he said Vidya Lakshmi Portal (VLP) was launched on August 15, 2015.


"Since the launch of the portal and up to March 9, 2016, the number of students registered on the portal is 38,462, the number of students who have applied for education loan are 862 and the number of students who have disbursed education loan are 39," he said.

VLP server is an interactive portal for students to register online, track progress of their loan applications and get grievances addressed online.

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