New Delhi, Feb 28 (IANS) To strengthen the banking sector in India, the government Monday said it will allocate Rs.6,000 crore to public sector banks and Rs.500 crore to regional rural banks.
‘I propose to provide a sum of Rs.6,000 crore for the year 2011-12 to enable public sector banks to maintain a minimum tier I CRAR (capital to risk weighted asset ratio) at 8 percent,’ said Finance Minister Pranab Mukherjee Monday in his budget speech in the Lok Sabha.
‘As a part of financial strengthening of regional rural banks, an amount of Rs.350 crore was given to these banks during this year. I propose to provide Rs.500 crore during 2011-12 to enable them maintain a CRAR of at least 9 percent,’ he added.
Considering micro finance institutions (MFIs) as an important mean of financial inclusion, the government also proposed to create India Microfinance Equity Fund of Rs.100 crore with Small Industrial Development Bank of India (SIDBI).
According to Mukherjee, the creation of a dedicated fund for providing equity to smaller MFIs would help them maintain growth and achieve scale and efficiency in operations.
A committee set up by the Reserve Bank of India (RBI) to look into issues relating to micro finance sector in India has submitted its report. The government is now considering putting in place a framework to protect the interests of small borrowers.
