MISSION INDRADHANUSH
Indradhanush
is the Sanskrit word for Rainbow in English.
Last
Friday (25th Sept 2015) the government of India launched Mission Indradhanush.
What
is it?
It’s a seven pronged plan-- Indradhanush--to
revamp functioning of public sector banks.
The seven elements include:
1. Appointments
2. Board of
Bureau
3. Capitalization
4. De-Stressing
5. Empowerment
6. Framework
of Accountability
7. Governance
Reforms
What is a Bank’s Board of Bureau?
Ø It’s a framework
under which the existing appointments board would be replaced by the Banks
Board of Bureau. Its members would be appointed in the next six months to be
headed by the RBI Governor.
Ø Banks
Board of Bureau will also hold bad assets of Public Sector Banks.
How Much Capitalization of Banks and Which Banks?
Ø
Under recapitalization plans for Public Sector Banks, 13
banks would get Rs 20,058 crore this financial year. The rest Rs 5,000 crore
would be allocated based on efficiency criteria.
Ø
SBI will get the highest Rs 5,511 cr, followed by Bank
of India at Rs 2,455 cr, IDBI at Rs 2,229 cr, PNB at Rs 1732 cr and IOB at Rs 2009 cr.
|
S.No
|
Name of Bank
|
Capital Allocation
|
|
|
|
|
(Rs. in Crore)
|
Capital Adequecy Ratio (in %)
|
|
1
|
State Bank of India
|
5531
|
12
|
|
2
|
Bank of India
|
2455
|
11.2
|
|
3
|
IDBI
|
2229
|
11.9
|
|
4
|
Bank of Baroda
|
1786
|
13.1
|
|
5
|
Punjab National Bank
|
1,732
|
12.9
|
|
6
|
Canara Bank
|
947
|
10.7
|
|
7
|
Indian Overseas Bank
|
2,009
|
10.1
|
|
8
|
Union Bank of India
|
1,080
|
10.2
|
|
9
|
Corporation Bank
|
857
|
11.1
|
|
10
|
Andhra Bank
|
378
|
10.7
|
|
11
|
Bank of Maharashtra
|
394
|
11.9
|
|
12
|
Allahabad Bank
|
283
|
10.4
|
|
13
|
Dena Bank
|
407
|
10.9
|
|
Total
|
20,088
|
|
|
The
mission is a small step in addressing the woes of Public Sector Banks. NPA’s
(Non Performing Assets) and stressed assets are a huge burden on the public
sector banks. This mission is a step in the direction of resolving these
issues. In addition Basel III requirements are also going to be effective since
2018. The government has limited time to get its act right to get the Indian
growth story moving.
Stressed
Assets – 11% of Total Bank Loans
NPA’s
– at end of 31st March 2015 = 2,97,000 Crores plus another 4,03,004 crores bad loans
of 530 corporate companies shown as rescheduled and restructured loans under CDR (corporate
debt restructuring) scheme. Bad loans struck up
in top 30 borrowal accounts of PSBS as on 31-3-2015 is Rs. 1,21,162 crores,"
Click
on the link below for GoI document in PDF format on Mission Indradhanush.
Sources: Business Standard; Economic Times;
FirstPost; GoI website
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