Union Budget 2010 Impact on banking sector

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The Indian banking sector has emerged unaffected from the economic crisis which recently hit the world. Hence to ensure the continuance of the sector's economic expansion and to meet the pre-requisites of a new financial system, FM proposed the requirement of international exposure to banks and improvement in the accessibility of banking services.

In his Union Budget 2010 speech the Finance Minister Pranab Mukherjee announced few benefits and initiatives which are projected to trigger the expansion and have a great impact on banking sector in FY 2010-11.

Union Budget 2010 Impact on banking sector

The Finance Minister in his Union budget 2010 speech proposed banking licenses to Indian banks to ensure the expansion of banking sector in size and turnover. He thus notified the consideration of RBI in offering extra banking licenses to private banks and also to non Banking Financial Companies, if the latter satisfies the RBI's requirements.

Union Budget 2010 Initiatives for Public Sector Bank

During the financial year 2008-09, the Government invested ` 1900 crore as Tier-I funds in 4 public sector players to uphold a contented level of Capital to Risk Weighted Asset Ratio. In addition an extra amount of ` 1200 crore has been invested cuurently and for the FY 2010-11, the FM suggested an amount of ` 16,500 crore to guarantee that the public sector players can achieve 8% Tier-I funds by March 31, 2011.

Union Budget 2010 Initiatives for Regional Rural Banks

Over the years Regional Rural Banks (RRBs) have played a significant part in offering monetary help to rural economy. The funds derived from these banks are distributed among the subsidized banks, Central Government and State Governments. Keeping in consideration that the banks were last subsidized in FY 2006-07, the FM proposed investment of more capital in order to reinforce the functioning of RRBs and to assist an improved lending to the rural financial system.

Last updated on : 15-05-2011

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