In 2015 under the Indradhanush plan the government had announced capital infusion of over seventy th...........

Economic Affairs Others

In 2015, under the Indradhanush plan, the government had announced capital infusion of over seventy thousand crores in public sector banks for four years. However, credit rating agencies had pointed out that the sum was insufficient because banks needed additional funds to

Meet Basel-III norms
Tackle the menace of rising bad loans

Which of the above is/are correct?

1 only

2 only

Both 1 and 2

None

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Explanation:

"Basel III" is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector. It is an improvement over Base I and Basel II norms released much earlier. These norms may include reducing bank investment in risky assets, increasing their capital base, strengthening management etc.

Statement 1: Rating agencies pointed that apart from PSBs face lack of competition and if business as usual continues, they will face dearth of funds for expansion because:

Private sector will give them a tough competition in coming years
Basel III norms required more funds to absorb greater risks for banks

Statement 2: Stressed assets (NPAs or bad debt) in the banking system have reached unacceptably high levels and hence, urgent measures were required for their speedy resolution. One of the way is by capital infusion, which will increase the liquid cash in banks.