Cabinet approves Rs 2.11 lakh-cr public sector banks' capitalisation plan

Rs 76,000 cr for bank capitalisation will be from budgetary support and markets and Rs 1.35 lakh cr from front-loaded recap bonds

The Indian government approved on Tuesday a state bank recapitalisation plan of Rs 2.11 lakh crore over the next two years, in a bid to clean banks' books and revive investment in a slowing economy.

Of the planned sum, recapitalisation bonds will account for Rs 1.35 lakh crore, while Rs 76,000 crore will come from budgetary support and equity issuance, said Rajiv Kumar, India's financial services secretary.

Finance Minister Arun Jaitley said the recapitalisation of state banks would be followed by a series of reforms. He did not give details.

The nature of the bonds