Giving a light of hope to the Public Sector Bank (PSU), the Finance Minister Arun Jaitley has promised more capital infusion into public sector banks, saying there's “merit” in their demand for more funds over and above what was provided in the Budget. He further added that 'Banks have made a strong case for additional capital... And over the next few months, this is something the government is going to seriously look at. The Minister also said that banks are free to take decision on tapping the market at an opportune time taking into account the market conditions and stability.
The government has earmarked Rs 7,940 crore in the Budget for recapitalisation of PSU banks for the current fiscal. Last fiscal, the government infused Rs 6,990 crore in nine public sector banks based on their performance.
The issue of additional capital requirement was also flagged by the Reserve Bank in view of mounting bad loans and support growth. RBI Deputy Governor S S Mundra had said the Budget amount marked for recapitalisation of PSU banks is not adequate and RBI has asked the Finance Ministry to raise the quantum of assistance in view of mounting bad loans and support growth.
Meanwhile, the Finance Ministry is likely to finalise additional capital requirement, over and above budget provision, for public sector banks in the next three months and the exercise of getting representations from individual banks for additional capital requirement would be completed by first week of July.