CAG writes to Finmin, seeks performance audit details of PSU banks recapitalisation

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The Comptroller and Auditor General of India (CAG) has written to the finance ministry looking for details in regards to the ongoing performance audit of authorities’s huge recapitalisation excercise of public sector banks (PSBs).

CAG is doing performance audit on recapitalisation of PSBs after 2016-17 and it has written a letter to the Department of Financial Services, Ministry of Finance, looking for varied info, together with rationale for distribution of capital amongst totally different PSBs, sources stated.

The Government of India made capital infusion to the tune of Rs 90,000 crore in 2017-18. This rose to Rs 1.06 lakh crore within the following yr. During the final monetary yr, the capital infusion by means of bonds was Rs 70,000 crore.

For the present fiscal, the federal government has earmarked Rs 20,000 crore for the capital infusion into the PSBs. Of this, the federal government allotted Rs 5,500 crore to Punjab & Sind Bank in November 2020 for assembly the regulatory requirement prescribed beneath the Basel III tips.

The audit could also be going to analyse the impression of capital infusion in PSBs and the way it has been ready to enhance the monetary parameters comparable to Return on Assets (ROA), Return on Equity (ROE) and fee of development of advances, sources stated.

In its final report launched in July 2017, CAG had identified some shortcomings in distribution of capital to varied banks.

It had additionally raised doubts over risk of PSU banks elevating about Rs 1 lakh crore from market by 2019.

“The rationale for distribution of government of India capital among different PSBs was not found on record in all cases. Some banks which did not qualify for additional capital as per decided norms were infused with capital, a bank was infused with more capital than required, while others did not receive the requisite capital to meet their capital adequacy requirements,” CAG had stated.

The Centre infused Rs 1,18,724 crore in PSBs throughout 2008-09 to 2016-17. CAG had stated. Of this, SBI acquired the utmost capital infusion of Rs 26,948 crore, which is almost 22.7 per cent of the full capital infusion.

IDBI Bank, Central Bank of India, Indian Overseas Bank and Bank of India had been additionally important beneficiaries with 8.77 per cent, 8.61 per cent, 7.88 per cent and seven.80 per cent of the full capital infusion, respectively. Punjab & Sind Bank and Indian Bank acquired the bottom capital infusion, at 0.20 per cent and 0.24 per cent of the full funds infused.

Central Bank of India and UCO Bank got capital in eight out of 9 years beneath audit scrutiny whereas Indian Bank acquired capital solely as soon as, in 2014-15.



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