‘PSBs must generate funds internally for re-capitalisation’

Committee: Form holding company to meet long-term capital needs.

The finance ministry may have promised public sector banks another round of capital infusion over the already allocated Rs 14,000 crore this fiscal to give cheap consumer and auto loans,but it got flak from a Parliamentary panel,which said that state-owned banks must generate funds internally for re-capitalisation.

Though the government is stated to have created additional headroom for PSBs to raise capital from the market,the reply is silent whether the ministry,as recommended by the committee (earlier),instructed the PSBs to generate funds internally also for their re-capitalisation, the Parliamentary Standing Committee said in an Action Taken Report on Monday.

The panel also asked the finance ministry to expedite the proposal to set up a holding company to meet the long-term needs of capital of PSBs. The proposal was a part of the Union Budget 2012-13 but the finance ministry and RBI are yet to announce its contours.

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Meanwhile,less than a month after the pension regulator Yogesh Agarwal resigned,the Panel has also pulled up the finance ministry for the under-achievement of the Swavalamban Scheme run under the New Pension System for private citizens.

Calling for a restructuring of the pension scheme to help improve its coverage of unorganised sector workers,the panel said it must be included in the Unorganised Workers Social Security Act,2008.

Launched in 2009,the Swavalamban scheme targets marginal investors and allows them to open accounts through an aggregator and also has relaxed minimum contribution provisions. The government contributes Rs 1,000 annually for subscribers who contribute between Rs 1,000 and Rs 12,000 per year.

As against the total coverage target of 40 lakh subscribers for 2013-14,so far only about half the number 20.50 lakh subscribers have been enrolled…the coverage under the Swavalamban Scheme is not as satisfactory as other social security schemes, the panel said.

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House panel asks why it cant get details of willful defaulters

New Delhi: The Parliamentary Standing Committee on Finance wants to know why it cant get details of willful defaulters and non-performing assets of public sector banks.

Seeking an explanation from the department of financial services,the panel in a report on Monday said,It is not clarified as to how…the disclosure of names of willful defaulters and their NPAs to a Parliamentary Standing Committee is prohibited when disclosure of such data is permitted under section 3(2) of the Public Financial Institutions Act,1983 which provides that a public financial institution…may furnish credit information to the Central government. ENS