PSU banks, from 2008 to 2014, engaged in indiscriminate lending: Jaitley

Finance Minister Arun Jaitley

Summary: Finance Minister Arun Jaitley held a press conference on Tuesday today.

But rejecting any pessimism over the economy, Jaitley said the government had held several internal meetings and that discussions were also held with Prime Minister Modi.

In February, Jaitley had said that the drop in economic activity due to demonetisation was only transient and its effect would not spill over to the next financial year. Congress leader Ghulam Nabi Azad told reporters here the opposition parties have worked out a joint strategy to register their protest against the November 8, 2016 demonetisation.

Bhanumurthy added that the move might have an impact on the government's fiscal deficit target this year.

" Cabinet had approved Rs 2.11 lakh crore bank capitalization plan".

Prime Minister Narendra Modi's government unlocked almost Rs10 trillion in investments to recapitalise state-owned banks and build new roads and highways on Tuesday, its biggest move yet to shore up an economy growing at its slowest in three years.

Once the world's fastest-growing major economy, India has seen its growth rate plummet to the lowest in three years, far below levels needed to create enough jobs to absorb the million Indians joining the work force every month.

Under the Indradhanush roadmap introduced in 2015, the government had announced infusion of Rs 70,000 crore in state-run banks over four years to meet their capital requirement in line with global banking risk norms, known as Basel-III. This decision followed public sector bank, State Bank of India merging its five associate banks, as also the Bharatiya Mahila Bank, with itself. Recap Bonds are used as payment for the shares bought by the government to ailing banks in a bid to raise their capitals. He said that the inflation, this year, is expected to remain below four percent. The Nifty PSU Bank index closed 3.79 per cent up at 2,984.15. But they also account for a bulk of the record 9.5 lakh crore bad loans.

Bank stocks rallied ahead of the news conference on expectations of a recapitalisation plan.

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