Govt seeks parliamentary nod for additional Rs 80,000 crore bonds for Bank recapitalisation

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

Govt seeks parliamentary nod for additional Rs 80,000 crore bonds for Bank recapitalisation

New Delhi: The government on Thursday sought parliamentary nod for additional Rs 80,000 crore bonds for the recapitalisation of public sector banks (PSBs).

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

Finance Minister Arun Jaitley in October had announced an unprecedented Rs 2.11 lakh crore two-year road map to strengthen PSBs, reeling under high non performing assets (NPAs) or bad loans. Their NPAs have increased to Rs 7.33 lakh crore as of June 2017, from Rs 2.75 lakh crore in March 2015.

The plan includes floating re-capitalisation bonds of Rs 1.35 lakh crore and raising Rs 58,000 crore from the market by diluting government s stake.

The government is working on the modalities for issuing the recapitalisation bonds as it aims to front-load the infusion with an aim to strengthen the state-owned banking sector, sources said, adding that the announcement in this respect, including detailed guidelines, will be made during this month.

Jaitley had also announced that banks would get about Rs 18,000 crore under the Indradhanush plan over the next two years.

Under the Indradhanush road map announced in 2015, the government had announced infusion of Rs 70,000 crore in state- owned banks over four years, while they will have to raise a further Rs 1.1 lakh crore from the market to meet their capital requirement in line with global risk norms, known as Basel-III.

In the last three-and-a-half years, the government pumped Rs 51,858 crore capital in the PSBs. The remaining Rs 18,142 crore will be injected into the banks over the next two years.

With PTI Inputs