FM proposes to set up a woman bank

Moneycontrol Bureau

The Finance Minister - P Chidambaram proposed to set up a state-owned bank exclusively for women. The said bank will mostly do business with women and also, it will be run by female bankers. By October, 2013; the bank should be operational.
Already two women are heading two public sector banks as CMD. They banks have women as their CMDs (V Iyer from Bank of India and S Panse from Allahabad Bank. India's largest private sector lender ICICI Bank is headed by Chanda Kochhar.
The Finance Minister will infuse Rs 1,000 crore captial to start such a bank. This is what banking industry was expecting from the Union Budget 2013 Capital infusion
Expected:  Recapitalization of state-owned banks by Rs15,000 -18,000 crore mostly in the form of tier- I capital.
As per the RBI estimates, Indian banking system needs Rs 5 lakh crore capital by FY2017-18 to meet new Basel-III norms. They are also of the view that government needs to pump in Rs.90,000 crore worth of capital to retain its shareholding in the PSU banks. Capital infusion by GOI in many PSU banks would enhance their Tier-I capital above 8% mark and would be helpful in growing their balance sheet. Agricultural lending
Expected: Increase in the agriculture lending targets to be raised further (18%) along with maintaining the interest subvention scheme at 3% level. The lending target was hiked from Rs.4.75 lakh crore in FY12 to Rs.5.75 lakh crore in FY13. Continued focus on financial inclusion as well thrust on rural economy. Government borrowings (loan)
Expected: At the same level like in FY13. Gross borrowing at around Rs 6 lakh crore as against Rs 5.70 lakh crore budgeted in 2012-13. Net borrowing below Rs 5 lakh crore, little changed from Rs 4.70 lakh crore slated for 2012-13. Any lower-than-expected borrowing is a positive for the bond market and government bond yields will fall further. However, yields will rise in case of higher borrowings. Supply of risk capital in infrastructure sector
Expected: More supply of risk capital into infrastructure sector in line with Infra debt fund, IIFCL (India Infrastructure Finance Company). Typically, banks are wary of long term infrastructure funding as it creates asset-liability mismatch. The proposed measure is likely to rekindle investment climate. Tax free infrastructure bonds
Expected: Government to allow banks going for long term bonds with a little tax break so that the future provision for infrastructure loans become better from lenders’ funding angle.