PSU Banks May Get Rs 70,000 Crore Via Recapitalisation Bonds In 2017-18

The finance ministry may infuse about Rs 70,000 crore through recapitalisation bonds in the NPA-hit public sector banks in the next four months, people aware of the matter said. Finance minister Arun Jaitley had in October announced an unprecedented Rs 2.11 lakh crore PSU bank recapitalisation plan, Rs 1.35 lakh crore of which would be raised using recapitalisation bonds.

The government, at present, is in the process of finalising the structure of recapitalisation bonds and a decision in this regard could be made by the end of this month. The finance minister had said that there were multiple options before the government for recapitalisation bonds and they are being examined and the best ones would be explored.

Once the structure is in the place, the government would front load bond issuance and preliminary assessment indicates that it could be between Rs 70,000 and Rs 80,000 crore, the people quoted above said. However, nothing has been finalised yet, they said, adding that the finance ministry would get better picture of requirements of various banks after the second quarter results are out.

Non-performing assets (NPAs) of public sector banks alone have increased from Rs 2.75 lakh crore in March 2015 to Rs 7.33 lakh crore as on June 2017. Besides recapitalisation bonds, the finance minister had announced that banks would get about Rs 18,000 crore under the Indradhanush plan over the next two years.

Under the Indradhanush plan announced in 2015, the government had announced Rs 70,000 crore capital infusion in PSU banks over four years while they will have to raise a further Rs1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms, known as Basel-III.

In the last three-and-half years, the government has pumped in Rs 51,858 crore capital in the public sector banks. Remaining Rs 18,142 crore would be pumped into banks over two years. (PTI)