85. Our public sector banks are well regulated, they must also be adequately capitalised.

Before the end of March, 2013, we shall provide `12,517 crore to infuse additional capital into 13 public sector banks. In 2013-14, I propose to provide a further amount of `14,000 crore for capital infusion. We shall ensure that public sector banks always meet the Basel III regulations as they come into force in a phased manner. 86. Financial inclusion has made rapid strides. All scheduled commercial banks and all RRBs are on core banking solution (CBS) and on the electronic payment systems (NEFT and RTGS). We are working with RBI and NABARD to bring all other banks, including some cooperative banks, on CBS and e-payment systems by 31.12.2013. Public sector banks have assured me that all their branches will have an ATM in place by 31.3.2014. 87. Women are at the head of many banks today, including two public sector banks, but there is no bank that exclusively serves women. Can we have a bank that lends mostly to women and womenrun businesses, that supports women SHGs and womens livelihood, that employs predominantly women, and that addresses gender related aspects of empowerment and financial inclusion? I think we can. I therefore propose to set up Indias first Womens Bank as a public sector bank and I shall provide `1,000 crore as initial capital. I hope to obtain the necessary approvals and the banking licence by October, 2013, and I invite all Honble Members to the inauguration of the bank shortly thereafter. 88. The Rural Housing Fund set up through the National Housing Bank is used to refinance lending institutions, including RRBs, that extend loans for rural housing. So far, 400,000 rural families have taken loans. In the last Budget, we provided `4,000 crore to the Fund. In consultation with RBI, I propose to provide `6,000 crore to the Rural Housing Fund in 2013-14. 89. Similarly, it is proposed to start a fund for urban housing to mitigate the huge shortage of houses in urban areas. I propose to ask National Housing Bank to set up the Urban Housing Fund and, in consultation with RBI, I propose to provide `2,000 crore to the Fund in 2013-14. Insurance 90. A multi-pronged approach will be followed to increase the penetration of insurance, both life and general, in the country. I have a number of proposals that have been finalised in consultation with the regulator, IRDA. Insurance companies will be empowered to open branches in Tier II cities and below without prior approval of IRDA. All towns of India with a population of 10,000 or more will have an office of LIC and an office of at least one public sector general insurance company. I propose to achieve this goal by 31.3.2014. KYC of banks will be sufficient to acquire insurance policies. Banks will be permitted to act as insurance brokers so that the entire network of bank branches will be utilised to increase penetration.

 Banking correspondents will be allowed to sell micro-insurance products. Group insurance products will now be offered to homogenous groups such as SHGs, domestic workers associations, anganwadi workers, teachers in schools, nurses in hospitals etc. There are about 10,00,000 motor third party claims that are pending before Tribunals/Courts. Public sector general insurance companies will organise adalats to settle the claims and give relief to the affected persons/families. 91. The Insurance Laws (Amendment) Bill and the PFRDA Bill are before this House. I sincerely hope that Government and the Opposition can arrive at a consensus and pass the two Bills in this session. 92. The Rashtriya Swasthiya Bima Yojana covers 34 million families below the poverty line. It will now be extended to other categories such as rickshaw, auto-rickshaw and taxi drivers, sanitation workers, rag pickers and mine workers. 93. A comprehensive and integrated social security package for the unorganised sector is a measure that will benefit the poorest and most vulnerable sections of society. The package should include life-cum-disability cover, health cover, maternity assistance and pension benefits. The present schemes such as AABY, JSBY, RSBY, JSY and IGMSY are run by different ministries and departments. I propose to facilitate convergence among the various stakeholder ministries/departments so that we can evolve a comprehensive social security package

Union Budget 2013-14: Mixed impact on banks says India Ratings

http://www.domainb.com/economy/budget/union_budget_2013/sectors/20130301_mixed_impact.html

The Union Budget 2013-14 will benefit government banks through equity infusion and gradual easing in stress on infrastructure loans. However, the continued focus on growth in agriculture credit may keep non-performing loans (NPL) levels elevated. The planned equity injection of Rs14,000 crore in FY14 will maintain the support momentum that the government initiated in FY09. More importantly, the finance minister reiterated the government's commitment to ensure that its banks ''always'' meet the Basel III capital norms.

The capital requirements, under the Basel III regime, will substantially pick-up after FY15 and peak in FY18.

The creation of a level playing field for private sector banks by extending them the interest subvention scheme for farmers will improve their competitiveness in rural areas. However, the 22 per cent growth targeted in agriculture loans may maintain the pressure on NPLs, particularly for government banks, as NPLs in this sector have been amongst the highest in FY13. Some easing of stress in the infrastructure sector may emerge with the setting up of a regulatory authority for the road sector, though improvements may not be noticed immediately. Asset quality pressure may ease if investments and thereby growth is stimulated by the proposed investment allowance.

Budget 2013: FM perfects the tightrope walk, balances banking sector expectations
http://profit.ndtv.com/news/banking-financial-services/article-budget-2013-fm-perfects-thetightrope-walk-balances-banking-sector-expectations-318834
The banking sector garnered a fair share of spotlight in the Union Budget 2013-14 presented in Parliament. Expressing the need to strengthen the financial services sector and to meet the stringent requirements under the BASEL III norms, a capital infusion of Rs. 14,000 crore in public sector banks has been proposed. Taking into account the wide network of bank branches and the low penetration of insurance in the country, banks have been permitted to act as insurance brokers. Further, the farm loan scheme has been extended to private sector banks which will help them achieve their priority sector lending targets. The Finance Minister, in what could be termed as the stand out proposition in the Union Budget, has proposed to set up India's first Women's Bank as a public sector bank that exclusively serves women and will be run predominantly by women. An initial capital ofRs. 1,000 crore is proposed to be allotted for this purpose.

Currently, interest paid on loan for a self-occupied property up to Rs.1,50,000 is allowed as deduction from total income of taxpayer. In order to provide a fillip to the housing sector, the FM has increased the amount of permissible deduction by Rs. 1,00,000 over and above the existing limit for loans granted by banks not exceeding Rs. 25 lakh availed in financial year 2013-14. The scheme comes with the condition that the value of the house should not exceed Rs. 40 lakh and the taxpayer should not own any residential house on the date of sanction of the loan. This is also expected to boost the demand for housing loans in the banking sector. In a stressed environment, asset reconstruction companies create significant value by acquiring nonperforming assets (NPAs) from banks and financial institutions, and then by recovering such NPAs. The Budget clarified that income earned by securitization of trusts shall be exempt from tax, which would be levied only at the time of distribution of income by such trusts. This clarification shall be welcomed by the banking sector. The Budget has also clarified that no distinction is to be made for provisions for rural advances and urban advances under section 36(1)(viia). Currently, the amount of bad debts written off to the extent it exceeds the credit balance in the provision for NPAs made under section 36(1)(viia), is allowed as a deduction. In this connection, the Supreme Court recently held in the case of Catholic Syrian Bank Ltd, that if the write-off is in respect of urban advances then the provision made in respect of rural advances cannot be reduced from such a write-off. Therefore, for a taxpayer to whom section 36(1)(viia) applies, the amount of deduction in respect of the bad debts actually written off shall be limited to the amount by which such debts exceeds the credit balance in the provision for NPAs account made under section 36(1)(viia) without any distinction between rural advances and other advances. .