As far as capital adequacy of the banks is concerned, we have been in close collaboration with the RBI to work out those capital requirements and we will fully support our banks, said Mr Sinha while inaugurating 11th Annual Banking Summit organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
The RBI is fully supportive of all requirements of liquidity and is standing to provide whatever liquidity is necessary, said Mr Sinha.
We are looking at all measures to ensure that there is sufficient liquidity and that we are able to support what is required as far as budget is concerned, added the union minister.
As part of Indradhanush, we have already laid out exactly how the capital support will flow out to the banks, we have said that we will provide Rs 25,000 crore in this fiscal year and an additional Rs 25,000 crore next fiscal year, so we are obviously working with the banks to ensure that they have adequate capital to meet all their capital requirements, further said Mr Sinha.
On the issue of Masala bonds he said that it is important to see how that market develops. There have already been series of issuance of masala bonds and there have been serious turbulence now in the global capital markets as those markets strengthen and recover, I am sure masala bonds will do well.
He also remained optimistic about rise in consumer spending. Spending will pick up, the effects of 7th Pay Commission will come into force sometime in the next fiscal year, as it is if you look at consumption and sectors of the economy linked to consumption be it hotels, airlines, consumer packaged goods are actually doing quite well.
Talking about IDBI Bank's QIP (qualified institutional placement) proposal, Mr Sinha said, IDBI is going through a QIP process, we have already said that we are open to having a discussion with strategic investors as far as IDBI is concerned, so let us see how the QIP book building process unfolds and there as part of that we will be happy to discuss with potential strategic investors as to how transformation of IDBI should be undertaken.
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He said that a real estate regulator is required to see how financing is going to work through the real estate markets. That bill is pending in the Parliament as the bill goes through, then those norms can be established.
Mr Sinha also said that the pressure built up by the government on black money issue has given desired results. We have taken various other steps be it foreign black money bill or requirement of PAN Card on transaction amounting to Rs 2 lakh, real estate transactions where we have said you cannot pay more than Rs 20,000 cash and so we feel all these steps will help us control the black money.
Answering to a media query about the calculations of the gross domestic product (GDP), he said that it is being done by a very reputed, independent organisation - the CSSO and that the government relied on their professional judgement and expertise to do that.
In his address at the ASSOCHAM Banking Summit, Mr Sunil Kanoria, president of ASSOCHAM said that RBI and Government need to re-look into existing policies and mechanism which should have separate guidelines for cases of wilful default and separate guidelines for cases of honest business.
Government and RBI needs to understand that no business can be risk proof and there will be chances of failures of business despite best intentions. Such honest efforts do need government support to revive them, said the ASSOCHAM chief.
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