The Government will stand solidly behind public sector banks to help them tide over difficulties that may arise if and when the global financial crisis gets aggravated, a top Finance Ministry official has said.
“We have a back-up plan for banks if the crisis aggravates. We don’t anticipate it (crisis to aggravate). But if it does happen, then the Government is solidly behind the public sector banks,” Mr D. K. Mittal, Financial Services Secretary, said at an Assocham conference here.
He also played down concerns over the health of the state-run banks. Mr Mittal termed certain international rating agencies’ move to downgrade the outlook of India and some of the state-run companies as ‘unjustified’.
There is a rise in the level of bad loans in state-run banks, but it is nothing to be alarmed about, he added.
Mr Mittal said the talk about a crisis in Indian banks was exaggerated. The Government has provided for Rs 14,588 crore in Budget 2012-13 for capitalising public sector banks. “We will capitalise these banks more if needed”
He said that the crisis management group formed by the Government was meeting regularly to monitor the global economic and financial situation.
The remarks come close on the heels of international ratings agency, Fitch, lowering the outlook on seven state-run companies, including some banks, to negative from stable. Fitch had also cut India’s sovereign rating outlook from stable to negative.