Published On: Wed, Jan 24th, 2018

Government to infuse Rs 1 lakh crore into PSBs this fiscal: Jaitley

New Delhi: Seeking to perk up public sector banks that have been hit by huge non-performing assets (NPAs), the government on Wednesday announced plans to infuse over Rs. one lakh crore including Rs 80,000 crore through recap bonds and Rs 8,139 crore as budgetary support during the current fiscal.

I have already moved a supplementary grant in Parliament on this

The government will raise Rs. 10,312 crore from the market, Finance Minister Arun Jaitley disclosed at a press conference here giving details of the recap programme.

Of the recap amount, among others the government will give Rs 10,610 crore to IDBI, Rs 8,800 crore to State Bank of India, Rs 5,375 crore to Bank fo Baroda, Rs 4,865 crore to Canara Bank and Rs 4,524 crore to Union Bank

“We have announced recapitalisation of PSBs in October, 2017 to the tune of Rs 2.11 lakh crore over two years. I have already moved a supplementary grant in Parliament on this. The entire objective of this exercise has been that it is government’s prime responsibility to keep PSBs in good health,” Jaitley said.

“We inherited a very major problem. The problem is of the past. Our objective was to find solution and create an institution so that the mistakes are not repeated,” he said.

Banking Secretary Rajiv Kumar said the recap plan would enable additional credit offtake capacity of PSBs by over Rs five lakh crore.

Economic Affairs Secretary Subhash Chandra Garg said the recap plan would be cash neutral and the bonds thus issued would be non-SLR (Statutary Liquidity Ratio) and non-tradable.

Jaitley said while planning recapitalisation the government had two objectives — which bank would get how much money and also that what happened in the past leading to large ammount of NPAs does not repeat itself.

He said this would be ensured by making sure that banks follow various steps to ensure that the governance of banks follows higher standards.

The recap would be accompanied by strong reforms package across six themes incorporating strong action points, an official statement said.

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