Finance Ministry likely to finalise capital infusion plan for PSBs; to exceed Rs 25,000 crore

New Delhi: Based on the request of various lenders which have been impacted by demonetisation amid rising bad loans, the Finance Ministry is likely to finalise capital infusion plan for public sector banks (PSBs) this week.

The capital infusion would be more than Rs 25,000 crore announced in the earlier Budget and the additional requirement would reflect in the final batch of Supplementary Demand for Grants to be presented in the upcoming Budget session, they said.

Saddled with rising bad loans, banks have already made a case for higher capital infusion and it is reflected in their demand sent to the ministry, sources added.

Besides, their normal business has hit during the demonetisation period.

The government has already announced fund infusion of Rs 22,915 crore, out of the Rs 25,000 crore earmarked for 13 PSBs for the current fiscal. Of this, 75 per cent has already been released to them.

The first tranche was announced with the objective of enhancing their lending operations and enabling them to raise more money from the market.

The capital infusion exercise for the current fiscal is based on an assessment of the compounded annual growth rate (CAGR) of credit growth for the last five years, banks? own projections of credit growth and an objective assessment of the potential for growth of each PSB, the ministry had said.

With PTI Inputs