World Bank loan to capitalise Indian banks is both unwarranted and avoidable, General Secretary of Communist Party of India (CPI) AB Bardhan has said.
In his letter to Prime Minister Manmohan Singh, Bardhan said, "I learnt with deep concern that the Government has approached the World Bank for a $3 billion loan to capitalise our public sector undertaking (PSU) banks and am further worried to learn that the World Bank has already sanctioned a sum of $2 billion as the first instalment."
Bardhan said, there was no need for PSU banks requiring to meet the same norms of capital adequacy, which were basically meant for private banks, since the country's public sector banks have total sovereign guarantee of the Government.
"I don't understand why the Government should go to the World Bank to generate funds to capitalize our public sector banks," he asked.
Even if such extra requirement is a necessity, it can be easily generated either by the Government or even through the IPO route as is presently permissible under the existing rules, he added.
The amount of $2 billion or Rs 10,000-crores is not such a huge sum that the Government cannot afford, Bardhan argued in the letter.