PSBs: Capital infusion won't fix them

The real intent behind the recapitalisation move is to get PSBs to start lending like before, says the author

As it has done with most problems inherited from the Congress-led government, the National Democratic Alliance (NDA) has tried to find a quick fix for the vast problem afflicting public sector banks (PSBs).

As part of that same ad hoc fix, the finance ministry plans to inject Rs 410 billion of fresh capital into ailing PSBs this fiscal year. This, says the finance minister, will allow five PSBs to exit the prompt corrective action (PCA) framework, which has restricted their lending capacity drastically and forced them to cut the concentration of loans in certain sectors. 

Finance Minister Arun Jaitley said: