Public sector banks (PSBs) in the country to get Rs 70,000 crore recapitalisation immediately, Finance Minister Nirmala Sitharaman said on Friday. The finance minister announced the decision at a press conference during which she spoke about the Indian economy.
Addressing the press conference, Sitharaman announced a slew of measures to pump-prime the economy. Additional lending and liquidity to the tune of Rs 5 lakh crore can be made available by providing this capital for the PSBs. "It will strengthen and help corporates, MSME, retail borrowers and small traders," the FM said.
The FM’s presser comes as sentiment is souring in the country's boardrooms after a much-anticipated budget in July failed to provide any stimulus, and instead hiked taxes on the ultra-rich and on foreign portfolio investors.
Economic growth in January-March slid to a near five-year low of 5.8 percent. Most analysts expect data due later this month to show that growth in April-June faltered even further.
The minister further announced that banks will soon make home and car equated monthly installments (EMIs) cheaper. "The RBI has discussed and directed banks to release the benefits of changes in repo rates to the customers. The aim is to reduce the interest rate on housing and auto rates," she said.
While the Reserve Bank of India had been cutting down the repo rate every quarter, the banks were not passing on any the rate cut to the borrowers. The banks have now agreed to grant this benefit, she observed.
"The banks have now decided to pass on any rate cut through MCLR reduction to benefit all borrowers. This will result in reduced EMIs for housing loans, vehicles and other retail loans, by directly linking repo rates to the interest rates," Sitharaman added. "Within 15 days of closure of the loan amount, all papers to be given back to the customers," she said.
Follow our complete coverage of measures announced by finance minister Nirmala Sitharaman here.
First Published: Aug 23, 2019 6:29 PM IST
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