TIL Desk/Business/New Delhi/ Noting that the “bailout” for state-run banks through the Rs 2.12 lakh crore recapitalisation plan has turned out to be a “moral hazard” in view of the corporates’ inability to repay loans, Finance Minister Arun Jaitley on Thursday said that capital infusion is solely aimed at strengthening the banking system.
He was replying to the debate on his Ministry’s supplementary demands for grants for 2017-18 in the Lok Sabha seeking Parliament approval for additional expenditure of Rs 80,000 crore towards recapitalisation of public sector banks (PSBs). The third batch of supplementary demands for grants was later approved.
“Banks have given money to industrialists in the past… however, some are now sitting in London, others cannot pay back,” the Finance Minister said in an obvious reference to corporate accounts which account for a major portion of the bad loans accumulated by PSBs, including the case of absconding industrialist Vijay Mallaya, who has been declared a proclaimed offender by a Delhi court. “This is the moral hazard with the bailout but we have to strengthen the banking system,” he said.
Related Posts
