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Expected more from Budget for state-run banks: Analysts

Thursday, 10 July 2014 - 7:18pm IST | Agency: PTI

Analysts today said while Finance Minister Arun Jaitley did present a roadmap of things to come in the banking space, his maiden Budget has left much to be desired for the sector.

"Some bolder measures on the transformation and reforms in the working of the public sector banks would have been better. Probably our expectations were a bit too high," Boston Consulting Group India partner and director Saurabh Tripathi told PTI here.

In his maiden budget speech, Jaitley today said the government is committed to hold on to its majority holding in state-run banks, but given the need to raise Rs 2.40 trillion for the transition to the Basel-III framework, there will be some dilution of shareholding.

He, however, added that the government will maintain a "majority" holding in banks and added that it will refer to retail investors while diluting its holdings.

"Roadmap wise, the Budget gives us clarity that the government will go to the public rather than pumping in its own money to recapitalise banks," consultancy firm EY partner for financial services Sameer Gupta said.

At least two analysts said the looming threat of agitations by unions would have prevented the minister from spelling out his agenda.

Analysts at ratings agency India Ratings welcomed the move to allow banks to raise long-term money to fund infrastructure projects by issuing bonds, saying the saving on the CRR and SLR will help the net interest margin.

However, commenting on the same move, another analyst said some concessions on the priority sector lending (PSL) requirements are also essential as the enlarged infrastructure book puts pressure on the low yielding PSL.

Consultancy firm Deloitte's senior director Monish Shah said the announcement to have uniform KYC norms across financial products is also a welcome move as it is very convenient and will help save time for customers.


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