UPSC Prelims 2018 Question:

With reference to the governance of public sector banking in India

consider the following statements:

1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
2. 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?

Explanation:

• Government of India announced recapitalisation of Public Sector Banks (PSBs) to the tune of Rs. 2.11 lakh crore in October 2017, through infusion of capital and raising of capital by banks from the markets. Rs. 88,139 crore was infused by the Government in PSBs during financial year (FY) 2017-18 after the recapitalisation announcement and provision of Rs. 65,000 crore had been made in the budget for the financial year (2018-19) for infusion. The capital infusion into public sector banks by the Government of India has not steadily increased in the last decade. So, statement 1 is not correct.
  
  

• In February 2017, the Union Cabinet approved the acquisition by the State Bank of India of its subsidiary banks namely State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore. The acquisition was in pursuance of the Indradhanush action plan of the Government and it is expected to strengthen the banking sector and improve its efficiency and profitability. So, statement 2 is correct.
  
  

Therefore, option (2) is the correct answer.

Subject: Economics | Money and Banking