New Delhi: Welcoming government's plan to recapitalise public sector banks with infusion of Rs 70,000 crore over the next four years, FICCI Monday said it augurs well for the banking sector and will help fuel economic growth.
"This is a positive development as it would help meet both the capital adequacy requirements of the banks as well as build on-lending capacity to fuel growth in the economy," FICCI President Jyotsna Suri said.
Public sector banks will need to raise Rs 1.10 lakh crore from markets to meet more than half of their capital requirement of Rs 1.80 lakh crore over the next four years.
Of this, the government is willing to provide Rs 70,000 crore - Rs 25,000 crore each in current and next fiscal and Rs 10,000 crore each in 2017-18 and 2018-19.
The industry body expressed hope that as public sector banks get further support from the government, they would slash lending rates commensurate with cuts announced by the RBI.
"The fiscal space created on account of savings in fuel subsidies and increased tax revenues due to better coverage and compliance should be utilised for recapitalisation of the banks.
"This four-year plan announced by the government augurs well for the health of the banking sector and is another step forward in government's concerted efforts to enhance growth of the economy," Suri said.
