Scheme for banks not applied as envisaged’

In News

The Centre’s Indradhanush scheme to recapitalise public sector banks (PSBs) based on their performance was not implemented in a manner envisaged, according to a report by the Comptroller and Auditor General of India (CAG).

About CAG report

  • According to the CAG report tabled in Parliament on Friday, as per the scheme, a portion of the recapitalisation was to be based on the bank’ performance. However, this was not followed during disbursal of funds.
  • The parameters used to determine whether banks required capital changed from year to year and in some years the rationale for capitalising banks was not even recorded. The scheme’s target of raising Rs. 1.1 lakh crore from the markets by 2018-19 was not likely to be met.
  • Audit also noticed that in some cases the rationale for distribution of GOI capital among different PSBs (Public Sector Banks) was not on record.
  • Some banks that did not qualify for additional capital as per the decided norms, were infused with capital, and in some cases, banks were infused with more capital than required.

Source : The Hindu

GS III : Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment

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