With reference to the governance of public sector banking in India, co

With reference to the governance of public sector banking in India, consider the following statements :

1. Capital infusion into public sector banks by the Government of India has steadily increased in the last decade.
2. To put the public sector banks in order, the merger of associate banks with the parent State Bank of India has been affected.

Which of the statements given above is/are correct ?

[amp_mcq option1=”1 only” option2=”2 only” option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option2″]

This question was previously asked in

UPSC IAS – 2018

Statement 2 is correct: As part of reforms to strengthen public sector banks, the merger of the five associate banks of SBI and Bharatiya Mahila Bank with the parent State Bank of India was completed in 2017. This was a significant step in consolidating public sector banking. Statement 1 is likely incorrect: While there have been significant government capital infusions into public sector banks over the last decade, particularly to address Non-Performing Assets (NPAs) and meet capital adequacy norms, the infusion has not shown a steady increase year-on-year throughout the entire decade, but rather occurred in large tranches during specific periods.

Government intervention in public sector banks includes capital infusion for recapitalization and consolidation through mergers. The merger of SBI associates was a major reform move.

The government has undertaken various measures to improve the health of PSBs, including recapitalization programs and consolidation. After the SBI merger, the government also initiated the merger of other PSBs in subsequent years to create fewer, larger banks.

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