What does recapitalisation of banks mean?

Bank recapitalization is a method to infuse new and fresh capital into banks to strengthen their balance sheet. To help with the credit flow, the government as well as private institutions use equity and debt instruments to recapitalize the banks. It is very important to ensure the credit growth of the economy.

What is consolidation of public sector banks?

The merger of public sector banks (PSBs) involves integration of six weaker PSBs with four better performing ‘anchor’ banks. Andhra Bank and Corporation Bank were merged with Union Bank while Oriental Bank of Commerce and United Bank were merged with Punjab National Bank.

What is recapitalisation and its need?

Bank recapitalisation, means infusing more capital in PSBs so that they meet the capital adequacy norms. The government, using different instruments, infuses capital into banks facing shortage of capital.

What are the classification of public sector banks?

Public sector banks are classified into two categories further- 1. Nationalised Banks 2. State Bank and its Associates. In nationalized banks the government control and regulates the functioning of the banking entity.

What is Recapitalisation of a company?

Recapitalization is the process of restructuring a company’s debt and equity mixture, often to stabilize a company’s capital structure. The process mainly involves the exchange of one form of financing for another, such as removing preferred shares from the company’s capital structure and replacing them with bonds.

Why public sector banks are merging?

In a move to restructure and redefine the country’s banking space, in 2021, the government of India merged 10 Public Sector (PSU) Banks into 4 banks. A merger is an agreement between entities where they pool in their assets and liabilities and become one entity.

Which banks merged with Indian Bank?

Punjab National Bank (PNB) took over Oriental Bank of Commerce and United Bank of India; Allahabad Bank became part of Indian Bank; Canara Bank subsumed Syndicate Bank; and Andhra Bank and Corporation Bank merged with Union Bank of India.

What is recapitalisation of banks Upsc?

Bank Recapitalisation: It means infusing more capital in state-run banks so that they meet the capital adequacy norms. Indian public sector banks are emphasized to maintain a Capital Adequacy Ratio (CAR) of 12\%. CAR is the ratio of a bank’s capital in relation to its risk weighted assets and current liabilities.

What is recapitalisation of a company?

How are banks classified in India?

Classification of Banks in India Commercial Banks can be further classified into public sector banks, private sector banks, foreign banks and Regional Rural Banks (RRB). On the other hand, cooperative banks are classified into urban and rural. Apart from these, a fairly new addition to the structure is payments bank.

How many public sector banks are in India?

After a series of mergers, the number of public sector banks has come down to 12, from 27 in 2017. Following are the 12 government-owned banks in India in 2021.