Industry Report: Banking in India: Initiatives of the Government Part III

March 9, 2017
Investment Bank

Read the previous part of the report here.

The chief regulatory body, which is supposed to deal with all the finance and banking related decisions, is the Government of India. In the recent times, this body seems to have taken a considerable amount of decisions in order to strengthen the Indian Banking Sector. Some of which are as follows.

In the month of July 2016, the Government of India reportedly allocated about 3.41 billion USD. This amounts to Rs 22,915 crore, which was allocated in the form of capital infusion to 13 public sector banks. This move is believed to increase the economic growth of the country by improving the liquidity and lending operations of these public sector banks.

The Reserve Bank of India (RBI) has already begun on its move to make all transactions digital in nature and absolutely paper free. Following in the same vein, the RBI has released the Vision 2018 document, which primarily aims at increasing the use of electronic payments through all the divisions of the society. This move will not only increase the usage of digital channels but also boost the customer base for mobile banking.

All the commercial banks which are scheduled will now be allowed to grant non-fund based facilities including partial credit enhancement (PEC), to all customers including those that do not avail any fund based facility from any of the banks present in India.

The Union Budget, which was announced in the year 2016-17 had a provision towards interest subvention. This provision is basically made to help in reducing the burden of loan repayment by the farmers. On account of this, an amount of 15,000 crore INR is being granted by the government.

The Government of India is looking to set up an exclusive fund, which will be a part of the National Investment and Infrastructure Fund (NIIF). This fund will basically be set up for dealing with all the stressed assets of banks. This fund will be taking over all the assets, which although viable do not have any additional fresh equity from promoters to complete the projects.

Post the massive drive that was conducted by the government to open up a number of bank accounts, quite a large number of Indians were financially included in the banking sector. The Reserve Bank of India plans on coming out with guidelines, which will be dealing with the basic know-your-customer norms. These norms would be the primary focus of protecting the consumers.

The government of India is well on a warpath, to provide insurance, pension, and credit facilities to all of those citizens, who were excluded from enjoying the benefits offered by the Pradhan Mantri Jan Dhan Yojana (PMJDY).

In a bid to provide relief to all the state level, electricity providing companies, the government has proposed to its lenders that, about 75% of their loans would soon be converted to state government bonds.

Thus with so many new and effective schemes falling into place, courtesy the government of India, things are looking quite positive for the banking sector. This is great news for those finance enthusiasts who opt for special training programs, offered by Imarticus Learning in the field of Finance and Investment Banking.


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