The World Bank and India have concluded negotiations for loans worth $3.2 billion for recapitalising state-run banks and funding for the India Infrastructure Finance Company Ltd.
The World Bank board would meet in September in Washington to approve a $2 billion loan for the recapitalisation of the state-owned banks and another $1.2 billion loan for the IIFCL. - Source: Economictimes
---
Although, the intention to recapitalize the banks and spend on infrastructure is 100% right, I don't see any need for a loan from "The Bank" at this stage because-
1. In the middle of the crisis last year, the average CAR ratio of public banks was around 13%. I don't think that this ratio would have fallen drastically since then
2. Infrastructure spending is required right now. But, frankly we can't be throwing money at the problem. Effective investment strategies are required; we have spent enough. Govt should focus on following the money that it has already allocated for infrastructure and ensure that the money enters the system soon
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment