Govt banks get Rs 48,239-crore capital boost to move out of PCA framework

The government has kept around Rs 5,000 crore as buffer for "any last-minute contingency"

The Union government on Wednesday approved a capital infusion of Rs 48,239 crore into 12 public sector banks (PSBs), with the largest chunk of money flowing into Allahabad Bank and Corporation Bank to help them come out of the Reserve Bank of India’s (RBI’s) prompt corrective action (PCA) framework.

Financial Services Secretary Rajiv Kumar said the capital allocation had been done to equip better-performing PSBs to stay above the PCA triggers and ensure the minimum regulatory capital for all PCA banks, among other objectives. The recapitalisation will be in the form of bonds.

With the latest round, the government has so far