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CAG writes to Finmin, seeks efficiency audit particulars of PSU banks recapitalisation

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The Comptroller and Auditor General of India (CAG) has written to the finance ministry searching for particulars in regards to the ongoing efficiency audit of presidency’s large recapitalisation excercise of public sector banks (PSBs).

CAG is doing efficiency audit on recapitalisation of PSBs after 2016-17 and it has written a letter to the Department of Financial Services, Ministry of Finance, searching for numerous data, together with rationale for distribution of capital amongst completely different PSBs, sources stated.

The Government of India made capital infusion to the tune of Rs 90,000 crore in 2017-18. This rose to Rs 1.06 lakh crore within the following yr. During the final monetary yr, the capital infusion by bonds was Rs 70,000 crore.

For the present fiscal, the federal government has earmarked Rs 20,000 crore for the capital infusion into the PSBs. Of this, the federal government allotted Rs 5,500 crore to Punjab & Sind Bank in November 2020 for assembly the regulatory requirement prescribed below the Basel III pointers.

The audit could also be going to analyse the impression of capital infusion in PSBs and the way it has been capable of enhance the monetary parameters comparable to Return on Assets (ROA), Return on Equity (ROE) and charge of development of advances, sources stated.

In its final report launched in July 2017, CAG had identified some shortcomings in distribution of capital to numerous banks.

It had additionally raised doubts over chance of PSU banks elevating about Rs 1 lakh crore from market by 2019.

“The rationale for distribution of government of India capital among different PSBs was not found on record in all cases. Some banks which did not qualify for additional capital as per decided norms were infused with capital, a bank was infused with more capital than required, while others did not receive the requisite capital to meet their capital adequacy requirements,” CAG had stated.

The Centre infused Rs 1,18,724 crore in PSBs throughout 2008-09 to 2016-17. CAG had stated. Of this, SBI obtained the utmost capital infusion of Rs 26,948 crore, which is almost 22.7 per cent of the full capital infusion.

IDBI Bank, Central Bank of India, Indian Overseas Bank and Bank of India have been additionally important beneficiaries with 8.77 per cent, 8.61 per cent, 7.88 per cent and seven.80 per cent of the full capital infusion, respectively. Punjab & Sind Bank and Indian Bank obtained the bottom capital infusion, at 0.20 per cent and 0.24 per cent of the full funds infused.

Central Bank of India and UCO Bank got capital in eight out of 9 years below audit scrutiny whereas Indian Bank obtained capital solely as soon as, in 2014-15.




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