Centre will have to put more funds into public sector banks, says RBI

Governance reforms and action plans to enhance operational efficiency and customer services are integral for recapitalisation

Public sector banks (PSBs) will need more capital infusion from the government for business growth and to meet regulatory norms and this must go hand in hand with their privatisation, the Reserve Bank of India (RBI) said.

In its assessment of Union Budget 2021-22, RBI said with PSBs accounting for a major share in advances made by scheduled commercial banks (SCBs) they might need to be recapitalised. This should be done to fund economic growth through improved credit offtake when demand picks up. Besides, recapitalisation and privatisation of PSBs must go together.

The Budget allocated Rs 20,000 crore towards recapitalisation of PSBs