FM spreads Diwali cheer, says gloom overdone

Oct 23 2013, 12:02 IST
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Summary* Says R3.24-lakh-crore worth of investments lined up

Finance minister P Chidambaram on Tuesday observed that the investment climate in the country wasn’t as dull as was being made out to be, pointing out that between April and September, 173 projects entailing an expenditure of R3.24 lakh crore had been submitted to banks. “Even in this current environment, we have got so many proposals and these are being processed,” Chidambaram told reporters after a three-hour-long meeting with chiefs of public sector banks (PSBs) at which he reviewed their quarterly performance.

The finance minister announced that the Reserve Bank of India’s (RBI) twin schemes to attract foreign funds, through Foreign Currency Non-Resident (Banking) accounts and for the purpose of tier I capital, had attracted $9.6 billion. The government has been keen to attract foreign exchange flows to shore up the balance of payments and keep the rupee stable. RBI governor Raghuram Rajan had announced a special swap window facility to help banks attract NRI deposits — banks are allowed to swap new FCNR(B) deposits with a minimum tenure of three years at a fixed cost of 3.5%.The schemes are open till November 30.

The finance minister also told newspersons that public sector banks will soon receive capital from the government. “An amount of R14,000 crore will be allocated to different banks today. We will sit with the Reserve Bank of India and Sebi for formal procedures,” he said.

The additional capital will help maintain lenders achieve a minimum tier I capital of 8% under Basel III norms and grow their loan books. Of the 26 public sector banks, Indian Bank is the only lender that has told the government it does not require any capital infusion this year. In 2012-13 the government had infused Rs 12,517 crore into the banking system and State Bank of India had got the largest chunk of Rs 3,004 crore.

Among the big-ticket projects for which funds have been fully tied up are Tata Steel Odisha (Rs 43,149 crore), Krishnapatnam Port (Rs 4,,931 crore), and ONGC Petroadditions (Rs 21,396 crore) and Orient Cement with an investment of Rs 1,718 crore. Prior to March 31, 176 new proposals were presented to banks, of over Rs 250 crore each, totalling 4.65 lakh crore, of which 137 projects have either been cleared or are in the advanced stages of clearance.

“This means things are not as gloomy as it is painted sometimes. There are new proposals and they are being cleared.

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