In its third supplementary demand in the current fiscal, the government has sought parliamentary nod for additional Rs 80,000 crore bonds for the recapitalisation of public sector banks (PSBs). Lok Sabha gave its nod to the central government's request for additional spending to boost the capital health of Public Sector and now the matter will be heard in Rajya Sabha on 5th January.
The Parliament approval is in line with the government's larger plan to strengthen the Indian economy with total financial inclusion, and bank recapitalization is a major part of the initiative. Though, it’s still not declared but the major beneficiaries may include State Bank of India, Bank of Baroda, Canara Bank and Indian Bank. The latest approval of funds will be utilised by March this year.
Under the Indradhanush road map announced in 2015, the government had declared 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 October last year, Finance Minister Arun Jaitley approved the recapitalisation of PSBs to support credit growth and job creation, entailing mobilization of capital of Rs 2.1 lakh crore in the next two years, including re-capitalisation bonds of Rs 1.35 lakh crore.