FD investment in leading public sector banks and private banks comprises 76 percent of total bank deposits. Leading public sector banks such as Bank of Baroda, SBI, Union bank of India, among others are offering the best interest rates on three-year FDs.
What public sector banks need is autonomy in operations. All government backed banks like HDFC Bank, ICICI Bank and Axis Bank proved that autonomy is all that is needed to make it a success.
The FM Pranab Mukherjee on Friday proposed to provide a sum of Rs 15,880 crore capital support to all public sector banks in the Union Budget 2012-13 . This will help maintain their minimum tier – I capital. In turn, lenders can expand their asset base maintaining the growth momentum. However, the proposed amount, many believe, is not adequate.