Govt seeks nod for Rs 800-billion PSB recapitalisation through bonds

Expects to issue these before end of fiscal year

The Finance Ministry sought Parliament’s approval to spend Rs 800 billion extra this fiscal year to recapitalise state-owned banks through bonds. Thursday’s move kick-starts the Rs 1.35-trillion bank recapitalisation bond programme announced by Finance Minister Arun Jaitley in October to help public sector banks come out of the spiralling non-performing asset mess.

The Rs 800-billion infusion would take place before March 31, officials said. “These bonds will have non-SLR (statutory liquidity ratio) status, and will be non-tradable,” an official said on condition of anonymity. The SLR is a portion of deposits that banks need to invest in government securities. The SLR