IANS | 27 Mar, 2023
A compliance audit report of the CAG has observed deficiencies in the recapitalisation of public sector banks (PSBs).
Department of Financial Services (DFS) has recapitalised PSBs for
credit growth, meeting the requirement for regulatory capital, equipping
better performing PSBs placed under Reserve Bank of India's prompt
corrective action framework to come out of it and meet capital
requirement on account of amalgamation of PSBs.
The CAG report
observed that DFS infused Rs 8,800 crore into SBI in 2017-18 for credit
growth considering it as the largest PSB in the country even though
there was no demand. The DFS did not conduct assessment of the capital
requirement as per its own standard practice before recapitalisation.
CAG report also observed that DFS considered cushion over and above the
norms prescribed by the RBI while recapitalising the PSBs. The RBI had
already prescribed enhanced capital requirement of additional 1 per cent
on banks in India. This resulted in excess infusion of Rs 7,785.81
Ther audit also observed that DFS infused Rs 831 crore
into the Bank of Maharashtra in 2019-20 against the bank's demand of Rs
798 crore to avoid surrender of funds amounting to Rs 33 crore.
compliance audit report No. 1 of 2023 of the Comptroller and Auditor
General of India on Union government (economic and service ministries -
civil) for the year ended March 2021 was presented in the Parliament on