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Govt infuses Rs 2.11 lakh crore in public banks to boost economy

By Deepika

The cabinet has approved an unprecedented public sector bank capitalisation of Rs 2 lakh 11 thousand, the Finance Ministry said Tuesday.

Arun Jaitley

Out of this, Rs 1.35 lakh crore will be through the recapitalisation bonds, while remaining Rs 76,000 crore from the budgetary support.

"It was decided that a bold step needs to be taken by the government to recapitalise banks," Arun Jaitley said while addressing a press conference on Tuesday.

"Between 2008 and 2013, public sector banks engaged in indiscriminate lending, which led to the rise in non-performing assets," he added. The rest 76,000 crore of the total allocated 2.11 lakh crore would come from other sources, Arun Jaitley said.

He also said the capital infusion would be accompanied by series of banking reforms which would be spelt out in the next few months.

The nature of the bonds and details of the bonds would be made public during course of time, he said.

Non-performing assets of banks have increased from Rs 2.75 lakh in March 2015 to Rs 7.33 crore as on June 2017.

The finance minister said banks would get Rs 18,000 crore under the Indradhanush plan.

Under Indradhanush roadmap introduced in 2015, the government had announced to infuse Rs 70,000 crore in state- run banks over four years to meet their capital requirement in line with global risk norms, known as Basel-III.

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