The missing 'R'

Recap will help, but PSBs need wider reforms

Finance Minister Nirmala Sitharaman surprised the market by allocating Rs 70,000 crore for the recapitalisation of public sector banks (PSBs) in the Budget. The market was expecting about Rs 40,000 crore on this account. Depending on which bank gets how much, the additional infusion is expected to be used as growth capital by the PSBs. As the finance minister noted in her speech, non-performing assets (NPAs) in the banking system have come down, the Insolvency and Bankruptcy Code is enabling recovery, and the flow of bank credit has improved. According to the Reserve Bank of India’s latest Financial Stability Report,