The finance ministry had unveiled a mega recapitalisation plan last month to improve PSBs' financial position as most of them are plagued by mounting bad loans.
The PSBs are to raise Rs 80,000 crore by issuing bonds, which are part of the Rs 2.11 lakh crore package.
Presenting the Union Budget 2018-19, Jaitley said: "The recapitalised banks will now have a greater ability to support growth. The programme has been integrated with an ambitious reform agenda, under the rubric of an Enhanced Access and Service Excellence (EASE) programme.
Financial Services Secretary Rajiv Kumar said the fiscal consolidation road map is extremely essential.
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"As the finance minister has mentioned, it is very well kept under glide path. So, keeping that in mind its (capital infusion) through the bonds. So no cash outgo from next year.
"These are cash neutral. It does not have any bearing on bond market," Kumar said.
The government has also proposed to allow strong regional rural banks to raise capital from the market to enable them increase credit to the rural economy.
The budget has also proposed to expand the scope of Prime Minister Jan Dhan Yojana by bringing all 60 crore basic accounts within its fold and undertake measures to provide services of micro insurance.
Jaitley said government will work to cover all poor households, including SC/ST households, under the Pradhan Mantri Jeevan Jyoti Beema Yojana (PMJJBY) which has benefited 5.22 crore families with a life cover of Rs 2 lakh at Rs 330 premium per year.
They will also be covered by Pradhan Mantri Suraksha Bima Yojana has covered 13.25 crore people with accident cover of Rs 2 lakh at Rs 12 per annum premium payment.