Arun Jaitley press conference highlights: Govt to infuse Rs 2,11,000 crore in public sector banks

Banking stocks to improve

“Share sale of state-owned banks to be attractive after recapitalisation. Once you strengthen banks, the appetite for their stock will improve,” says Finance Minister Arun Jaitley.

Recapitalisation bonds in larger interest of the nation: Jaitley

Finance Minister Arun Jaitley says that whether or not the recapitalisation bonds will impact fiscal deficit is a function of what the nature of the bond will be and which agency issues the bonds. But even if it is a part of the fiscal deficit, it will be in the larger interest of the nation.

How will recapitalisation bonds work?

One big question at this moment is how exactly the recapitalisation bonds will work and what will be its impact on the government debt situation? During the presser Arun Jaitley said the government will have to work out the nature of the recap bonds. Jaitley cited international experience where similar bonds are not part of the fiscal deficit but mentioned that in India the situation could be different. The critical clarification needed now is to see which will is the agency that will issue these bonds. If the government issues these bonds, then it becomes part of the government debt. There is no clarity on this as of now. Besides, there is no clarity on for how many years these bonds will be issued. The details of the recapitalization bonds will be keenly watched. In a chat with CNBC-TV18, former RBI deputy governor, KC Chakrabarty, recap bonds are good instruments but if banks need to bear the cost of the exercise, this may not be a good way to recapitalise the banking sector.

Boosting public investment consistent attempt of govt: Jaitley

“Boosting public investment is a consistent path we have followed. There are no embargoes as per as wilful defaulters are concerned,” says Finance Minister Arun Jaitley.

GST a legitimate tax: Jaitley

“People who were worried about 2G and coal blocks would be affected by the legitimate tax,” " says Finance Minister Arun Jaitley on Congress vice-president Rahul Gandhi’s jibe on GST.

Indiscriminate lending by banks

“Between 2008 and 2013 public sector banks engaged in indiscriminate lending,” says Finance Minister Arun Jaitley.

Bold step by the govt: Jaitley

“It was decided that a bold step needs to be taken by the government to recapitalise banks,” says Finance Minister Arun Jaitley.

Need to increase public investment: Arun Jaitley

“There is a need to increase public investment.Measures today will boost infra spending in a big way. Public sector banks have adequate lending capacity now, post demonetisation,” says Finance Minister Arun Jaitley.

LIVE: The Cabinet decision will provide improved market access to MSMEs: @FinMinIndia https://t.co/5qKs8ieG3V #NewIndiaTakeOff pic.twitter.com/zeXBmZIMCF

— PIB India (@PIB_India) October 24, 2017

PSB Recapitalisation
Banking Secy: Rs 1.35 lk cr will come via recapitalisation bonds & Rs 76,000 cr via budgetary support, mkt raising

— CNBC-TV18 (@CNBCTV18Live) October 24, 2017

Big bonanza for banking sector

Government officials listed out plans to increase spending on infrastructure projects such as the construction of 34,800 km of roads under the BharatMala programme with an investment of Rs 5,35,000 crore. This is indeed an encouraging move and, probably, the only option with the government right now to push growth when private investments are really not taking off. Top finance ministry officials stressed on strengthening the banking sector by recapitalizing public sector banks and enabling them to lend to key productive sectors in the economy. But, the big announcement came when officials talked about the cabinet approval of Rs2.11 lakh crore recapitalization package for state-run banks, of which Rs1.35 lakh crore will come from recap bonds and Rs76000 crore from budgetary support and market-raising. If this plan becomes a reality as envisaged, this will be a big booster dose not just to the banking sector but to the larger economy as well. One needs to wait for the details though.

Govt takes big step to make public sector banks healthier 

The government in an “unprecedented” cabinet nod has allowed Rs 2,11,000 crore to be used for PSB capitalisation. Of this, Rs 1.35 lakh crore will come from recap bonds, while the rest will come from the market and budgetary support.

Need for stronger banks

“Strong banks are the need of the hour,” says finance ministry

LIVE: Increased provisioning done by PSBs to cover expected losses, improving banks' health: @FinMinIndia https://t.co/5qKs8ieG3V pic.twitter.com/R4Q6ziFEqS

— PIB India (@PIB_India) October 24, 2017

Rising NPAs

“Post systematic Asset Quality Review, stressed assets have been recognised as non-performing assets,” says Ministry of Finance.

PWDs step in 

“Road building to be delegate to many entities like state PWDs,” says finance secretary Ashok Lavasa.

A look at the lending by Public Sector Banks, from the presentation by @FinMinIndia
LIVE: https://t.co/5qKs8ieG3V pic.twitter.com/Jh1JmtmdUw

— PIB India (@PIB_India) October 24, 2017

Power for all. #NewIndiaTakeOff pic.twitter.com/oBz9sCUTsw

— PMO India (@PMOIndia) October 24, 2017

Big push to rural connectivity. #NewIndiaTakeOff pic.twitter.com/qgSatJVV4r

— PMO India (@PMOIndia) October 24, 2017

Infrastructure expansion at an unprecedented scale. #NewIndiaTakeOff pic.twitter.com/T2XGsb1Oab

— PMO India (@PMOIndia) October 24, 2017

LIVE: Some details of financing of road construction under #BharatMala #NewIndiaTakeOff pic.twitter.com/UjfoCWp97L

— PIB India (@PIB_India) October 24, 2017

New coastal roads to come up

“About 2,000 km of coastal roads to be constructed in Phase I,” says finance secretary Ashok Lavasa.

Damage control mode

The Narendra Modi government has clearly begun its efforts to manage perceptions on the economy in view of criticism from within the ruling party and outside. As the presser began on Tuesday evening, Union Finance Minister, Arun Jaitley said the government has done a detailed analysis of the economic situation and is willing to respond in any manner required to address the problems in the economy. This is sort of an admission that government has finally acknowledged the problems in the economy. Finance ministry officials listed out key macroeconomic numbers that show healthy fundamentals—low inflation, fiscal deficit and high foreign exchange reserves. But, what about plans to tackle bigger problems—crisis in the banking sector, falling private investments, land and labour reforms and a seeming rise in unemployment?

Targeted spending by the government

“Effective and targeted government spending is the main priority of the government,” says finance secretary Ashok Lavasa.

New roads to be constructed under BharatMala programme

“34,800 km of roads to be constructed under the BharatMala programme with an investment of Rs 5,35,000 crore to be invested,” says finance secretary Ashok Lavasa.

GST biggest reform: Subhash Garg

“GST has been the biggest reform, along with other ones like demonetisation and the battle against black money,” says economic affairs secretary Subhash Garg.

Big push to budget spending: Ashok Lavasa

“There has been a big push to budget spending as the budget was passed by 31 January this year,” says finance secretary Ashok Lavasa.

Rising foreign reserves

“Foreign reserves have crossed $400 billion this year. $100 billion came in last year,” says Economic Affairs Secretary Subhash Garg. 

Low inflation

“India is a picture of consistent low inflation,” says Economic Affairs Secretary Subhash Garg.

Jaitley allays fears on economy

**"**There are strong macroeconomic fundamentals," the minister said.

Discussions on economy held with prime minister: Jaitley

“We will report on the situation as they develop. A lot of internal meetings on the state of economy internally within the ministry were held. Discussions were also held with the prime minister. But India has remained one of the fastest growing economies in the world,” says Finance Minister Arun Jaitley.

Arun Jaitley likely to speak on state of the economy: CNN-News18

CNN-News18 reported that the finance minister is likely to address the nation on the state of the economy. He had recently discussed non-performing assets management with Prime Minister Narendra Modi.

Arun Jaitley to address a press conference at 4 pm

FM Shri @arunjaitley to address a Press Conference at 4 pm today at National Media Centre in natonal capital.

— Ministry of Finance (@FinMinIndia) October 24, 2017