Government to infuse Rs 1 lakh crore into 20 public sector banks by March

New Delhi: As part of its recapitalisation roadmap, the finance ministry said on Wednesday that Rs 88,139 crore will be infused in 20 public sector banks (PSBs) in the FY18.

Of this, Rs 80,000 crore will come through recap bonds and Rs 8,139 crore as budgetary support. Another Rs 10,312 crore will be raised from the market for the current fiscal, taking the total capital inflows to around Rs 1 lakh crore (Rs 1 trillion) in FY18.

In October, the government had unveiled an unprecedented Rs 2.11 lakh crore two-year capital inf-usion plan in state-owned banks to strength their balance sheets, which we-re saddled by record non-performing assets (NPAs).

This will free the balance sheets of state-owned banks so that they can start lending to corporates and industry to restart private investment cycle.

The ministry said that the move will increase credit deployment of banks by at least Rs 5 lakh crore which will boost the economic growth.

Finance minister Arun Jaitley said steps need to be taken to ensure that governance of banks follows the highest standards and there is a need for institutional mechanism to ensure past is not repeated.

“We inherited a very major problem and therefore, we have been involved in finding a solution to that problem,” he said.