Around 10 state-run banks have submitted turnaround plans to the Government, which is necessary for getting a fresh infusion of funds. These lenders include IDBI Bank, Union Bank and Bank of India among others. According to the Minister of State for Finance, Santosh Kumar Gangwar, it has already been decided that future infusion of capital in these banks will be subject to the achievement of particular milestones, which have been agreed upon as per the turnaround plan on a quarterly basis.
This statement from Gangwar came in the form of a written reply in the Rajya Sabha. Indian Overseas Bank is also preparing a turnaround plan currently according to Gangwar. He also added that Andhra Bank, Allahabad Bank, Dena Bank, Central Bank of India, United Bank of India, UCO Bank and Bank of Maharashtra are among other public sector lenders that have already submitted their turnaround plans. There will be a monitoring mechanism employed for assessing quarterly performance of these public sector banks.
The performance will be monitored by SBI Capital Markets and the department of financial services will be provided information and updates on the same. Banks that will not be able to deliver on this turnaround plan (that has been agreed upon) for a period of 2 years, will then be classified as banks that are eligible for alternative measures according to Gangwar. In the recapitalization exercise that was carried out in the last fiscal year, the Government had taken a decision that around 25% of the total capital requirement of banks would be dispatched only after benchmarks were achieved. These benchmarks would be set against selected parameters. The total requirement of public sector banks stood at Rs.8,586 crore.