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Abstract
A stable and sound banking system is inevitable for the healthy growth of an economy. Public Sector Banks (PSBs) in India plays a crucial role in the Indian financial system. According to Economic Survey 2015, Public Sector Banks in India face two fold problems viz; policy issues and structural issues. The profitability of PSBs is lower mainly due to provisioning for restructured projects as well as for Gross Non Performing Assets (NPAs). The profits of most of the PSBs dwindled due to bad loans on its records, which have produced a threat of capital attrition. The major problem of Ballooning NPAs is the biggest impediment that chokes PSBs effective performance and operations. The Government of India unveiled seven point plans to revive the fortunes of PSBs in India. In India, Public Sector Banks expected to make higher provisioning over and above the provisioning made for stressed assets, that they may sell the assets at lower discounts, thus increasing the capital requirements. The Union Government has announced a new plan named as ‘Indradhanush 2.0’. The present plan encompasses ₹ 20,000 Crore for immediate capital infusion, creation of a single holding company and minimizing political interference. Indradhanush scheme is a seven-pronged strategy to revamp the Public Sector Banks in India. The present scheme focuses on setting up a transparent and quick-paced hiring mechanism which can allow smooth function of PSBs. The present study is an attempt to establish the effectiveness of Indradhanush strategy introduced by the Union Government. The study was also analysed the performance of Indradhanush for addressing the major issues and challenges faced by the Public Sector Banks in India.