How Recapitalization will Revive Indian Banking


How Recapitalization will Revive Indian Banking

Government declared recapitalization of Public Sector Banks in tunes of Rs. 2.10 Lakhs which will be given to enhance advances and generate jobs which had been hit by low advancing by banks. This was a much needed step required by the banking industry especially Public sector Banks which were hit by swelling NPA’s due to incomplete projects and slowdown in the economy.

We are here with a few ways in which recapitalization will help reviving the Indian Banking System

  • Capital makes a bank stronger. Capital gives a bank an opportunity to advance more. Credit Growth would result in more job opportunities and higher spending which would help in revive Indian markets which are suffering from a slow down.
  • As recapitalization will support credit growth, it is also expected that with revival of economy, bank will be able to fight swelling NPA’s in a better way. With Increased spending industries will be manufacturing more and in medium term would benefit banks reduce NPA’s significantly
  • As more industries will be coming up and banks will be encouraged for credit growth, employment opportunities are set to increase. According to an assessment if Recapitalization done properly, it would create over 3cr jobs in a time span of 2 years.

Will it be beneficial for Banking Job Aspirants

With recapitalization expected to support credit growth, Banks NPA is set to decrease. With this slowly banks under PCA will be easing their positions regarding NPA’s and restrictions laid by RBI on them would be eventually lifted once again opening opportunities in banking sector.

Its effect on Settlement Due in November 2017

Effect of recapitalization of Banks will be limited on Banking settlement due in November 2017. But in coming years, it will be witnessed that benefits bankers enjoy will increase and work loads will go down significantly.

Will Bank Merger go On?

There has been air on Merging of all PSU banks in 5-6 entities. It is expected that Government would recapitalize banks upon merger so that capital is not distorted and strong Indian banks are created. Merger of All SBI associates with SBI was concluded successfully in month of May 2017 given government a go ahead for merger of other banks together.

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