"These measures augur well for the banking system and point to the resolve of the government to make the system overcome the challenges being faced by it because of the huge non-performing assets (NPAs) and constrained capital adequacy ratio," SIDBI Chairman Mohammad Mustafa said in a statement here.
"These steps will enable enhanced credit disbursement in the system," he added.
In a stimulus package aimed to boost flagging economic growth, create jobs and increase credit flow, the Union Cabinet on Tuesday approved a Rs 2.11 lakh crore recapitalisation plan for state-run banks and massive road infrastructure investment of nearly Rs 7 lakh crore over five years.
Of the support to banks, Rs 1.35 lakh crore will be raised through recapitalisation bonds and the remaining sum through budgetary support and market borrowings.
"This large recapitalisation plan would be positive for the credit quality of these bonds and serve to reinforce the expectation of strong government support for these banks," said Sankar Chakraborti, Chief Executive SME Rating Agency of India (SMERA), which was created by SIDBI.
SIDBI is the premier funding institution for the micro, small and medium enterprise (MSME) sector.
(This story has not been edited by Social News XYZ staff and is auto-generated from a syndicated feed.)
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Doraiah Chowdary Vundavally is a Software engineer at VTech . He is the news editor of SocialNews.XYZ and Freelance writer-contributes Telugu and English Columns on Films, Politics, and Gossips. He is the primary contributor for South Cinema Section of SocialNews.XYZ. His mission is to help to develop SocialNews.XYZ into a News website that has no bias or judgement towards any.