Out of the planned capital infusion of Rs 25,000 crore in the public sector banks in 2015-16, the government will provide the remaining Rs 5,000 crore by March to strengthen banks balance sheets and enable them to increase lending.
“As committed, banks will get fund infusion in the fourth quarter. Banks will get about Rs 5,000 crore,” Department of Financial Services Secretary Anjuly Chib Duggal said on Wednesday on the sidelines of an event on social security net.
Banks will get funds after Parliament approves the third supplementary demand for grants in the upcoming Budget session expected to start on February 23. As per the finance ministry estimates, Indian public sector banks need Rs 1.80 lakh crore by March 2019 to meet Basel III norms, which specify the amount of capital banks are required to keep against lending.
The government had arrived at Rs 1.8 lakh crore capitalisation needs for PSU banks assuming credit growth rate of 12 per cent for the current year and 12-15 per cent for the next three years depending on the size of the bank and their growth ability.
Last August, the finance ministry unveiled a plan called ‘Indradhanush’ to reform PSBs which also detailed capital infusion for the next four years, some of which would depend on the performance of the lenders.