Public Sector Banks to get Rs 70,000 crore Friday July 31,2015

The finance ministry on Friday July 31,2015 outlined a Rs 70,000 crore capital infusion plan into PSU banks over four years to enable them to increase funding to boost the economic activity in the country.

 

“It is a long overdue step. The government in the past has talked about it. But this time the government is actually impl-ementing it. This will gave a boost for investment and growth in India,” said finance minister Arun Jaitley.

As part of the bank recapitalisation plan, the Centre has said that it will infuse Rs 25,000  crore in the current fiscal, which is much higher than the amount earmarked in the Budget at about Rs 7,940 crore. 

RBI governor Raghuram Rajan said that the Rs 25,000 crore capital infusion by the government in public sector banks is “adequate and a good beginning”. 

As per the plan, in the next FY, another Rs 25,000 crore will be infused into the banks. In the next two FYs Rs 10,000 crore will be given to banks in each year.  

The finance ministry said PSU banks as of now are “adequately capitalised” but would need  another Rs 1,80,000 crore over the next four years. Of this, the government plans to provide Rs 70,000 crore through budgetary  support. “Improved valuations coupled with value unlocking from non-core assets as well as improvements in capital productivity, will enable PSU Banks to raise the remaining Rs 1,10,000 crore from the market,”