Q96. With reference to the governance of public sector banking in India, consider the following statements:
- Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
- To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: B
- The purpose of capital infusion into public sector banks (PSBs) is to strengthen the lending capacity and improve credit growth among PSBs that are saddled with a heavy, non-performing assets (NPAs) as well as are struggling to meet capital adequacy ratio.
- Statement 1 is not correct: Capital infusion into public sector banks by the Government of India has not steadily increased in the last decade. As per the Department of Financial Services data, Rs. 25,000 crores were infused in 2016-2017 Financial Year while only Rs. 10,000 crores were infused in the FY of 2017-18.
- Statement 2 is correct: One of the desired objectives of consolidation of banks is the streamlining of banking operations and reduce their NPA burden. In 2017, State Bank of India merged with five of its associate banks, which are: the State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad, and State Bank of Patiala along with Bhartiya Mahlia Bank.
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