Government Intervenes: Plans To Recapitalise Banks To The Tune Of Rs 42,000 Crore By March 2019

The government will spend the next tranche of its Public Sector Banks (PSB) recapitalisation scheme into the respective banks by next month (December 2018) and a total infusion of Rs 42 thousand crores will be made by March 2019, Business Standard has reported .

In October 2017, the government announced that it would undertake re-capitalisation of PSBs which were reeling under financial stress due to the rise in Non-Performing Assets (NPAs). This plan would help PSBs meet minimum regulatory capital requirements (like Basel III norms) and provide them with a war chest to undertake further lending, thereby boosting economic growth.

Commenting on the sound financial health of some PSBs, the official stated: “Some big state-owned banks like State Bank of India (SBI) and Punjab National Bank (PNB) may not need a further capital infusion from the government in 2018-19. PNB has already received regulatory capital twice so far.”

It was earlier reported that though Reserve Bank of India (RBI) has deferred the deadline to comply with Basel III capital norms to March 2020, the government is still going to stick to the capital infusion plan, to strengthen the Indian banking system.

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