Rs 10,000 cr sufficient in 2017-18 for bank recapitalisation: Vinod Rai

New Delhi, Feb 16 (IANS) Banks Board Bureau chief and former Comptroller and Auditor General of India Vinod Rai on Thursday said that Rs 10,000 crore allocated towards recapitalisation of public sector banks (PSBs) in the Union Budget 2017-18 was “sufficient”, as the government was likely to go for a rights issue.

“It should be sufficient. Government will probably go for a rights issue as well, so with the Rs 10,000 crore they will be able to leverage more from the market,” Rai said here on the sidelines of the launch of a new Bandhan Bank branch.

Rights issue is an issuance of shares to the shareholders, in accordance with the number of shares held by them, at a special price.

The central government has provided Rs 10,000 crore for recapitalisation of banks owned by it in the Union Budget 2017-18.

Presenting the budget in Parliament, Finance Minister Arun Jaitley said that additional allocation may be provided as required.

On making the public sector banks’ pay packages more attractive, Rai said that the proposal on variable pay structure and Employee Stock Ownership Plans (ESOPs) is under consideration of the government.

“The proposal has been given to the government. It was given in January and the government will examine it,” Rai said.

Rai had said that he was looking at far more attractive packages for public sector banks by next fiscal, with bonus, ESOPs, performance linked variables — monetary or non-monetary benefits, to make it more attractive for professionals to enter the PSBs.

“We may not be able to change the fixed income but we are looking at making the variable part of the package more attractive as the compenasation package of the PSBs needs to be improved in some way,” he had said.