Bank recapitalisation News

Finance Minister Arun Jaitley on Saturday said the government`s move to recapitalise public sector banks (PSB) would improve their lending capacity.

This is the third supplementary demand by the government in the current fiscal.

The Finance Ministry would soon announce contours of the recapitalisation bonds and the amount to be front loaded during the current fiscal.

In October, government had announced a Rs 2.11- trillion capital infusion into the NPA-hit public sector banks over the next two years.

The banks will also be getting nearly Rs 18,000 crore under the Indradhanush plan.

Last month, the government had unveiled a staggering Rs 2.11 lakh crore two-year road map to bolster NPA-hit public sector banks.

The lending growth is still likely to remain weak, at least in the short term, as banks will prioritise asset resolution and provisioning over expansion, Fitch said.

In a bid to shore up cash- strapped public sector banks, the government injected Rs 22,915 crore capital in 13 lenders including SBI and Indian Overseas Bank to revive loan growth that has hit a two-decade low.

Government will infuse Rs 22,915 crore in 13 public sector banks for the current fiscal ending March 2017.

The government is likely to infuse additional capital of about Rs 5,050 crore in some public sector banks this week

Barclays also highlighted bank recapitalisation.

The government sanctioned an additional Rs 700 crore for the recapitalisation of RRBs and extended the validity period for the fund infusion to next fiscal.