Days after announcing big banking reforms, the Narendra Modi government on Tuesday approved over Rs 9,000 crore capital infusion in IDBI Bank with a view to increasing the lender's capital base. Giving out the details about the decision of the Union Cabinet, Information and Broadcasting Minister Prakash Javadekar said that the Cabinet cleared recapitalisation of IDBI Bank with one-time infusion of funds by both the government and the LIC. Out of Rs 9,000 crore, the government will provide Rs 4,557 crore as one-time re-capitalisation to IDBI Bank, he said. Besides, he said, LIC will infuse Rs 4,700 crore.
The announcement comes after the bank mergers that was made official on Friday last week. The government had unveiled a mega plan to merge 10 public sector banks into four. The mega bank mergers are a continuance of the government’s attempt to consolidate the public sector banks. Union Finance Minister Nirmala Sitharaman on Friday announced creation of four large entities after merger of 10 public sector banks.
At a media briefing, she said Oriental Bank of Commerce and United Bank will merge with Punjab National Bank to create the nation's second-largest lender behind State Bank of India. Also, Syndicate Bank will merge with Canara Bank while Andhra Bank and Corporation Bank would subsume into Union Bank of India, and Allahabad Bank will be amalgamated with Indian Bank.
The mergers announced on Friday, together with two set consolidations done last year, will reduce the number of public sector banks to 12 from 27 in 2017.
These mergers will aim to create fewer and stronger global-sized lenders with robust balance sheets with an aim to boost credit and spur growth. However, the mergers will also have a range of impact on the customers of these 10 public sector banks.
Amid the stagnant economic woes, India’s auto sector is also facing the worst slump in decades. Nearly 3,50,000 people have lost their jobs since April as India’s auto sector faces worst ever slump, forcing companies to shut down their factories and axe shifts, according to a report published in Reuters. The report, citing industry sources, slumping sales of cars and motorcycles have forced automakers, parts manufacturers and dealers to laid off these workers.
While car and motorcycle owners handed pink slips to at least 15,000 employees, component manufacturers laid off 100,000 employees. The remaining jobs were lost at dealers end with many of them closing their agencies.
(With agency inputs)