More capital to PSBs will push credit to MSME sector: Arun Jaitley

'Third engine' of private investment must be fired up to propel growth and create jobs

Finance Minister Arun Jaitley on Sunday said more capital for state-owned lenders would prompt public sector banks (PSBs) to increase credit flow to micro, small and medium enterprises (MSMEs) so that the “third engine” of private investment is fired up to propel growth and create jobs.

Last month, the government had unveiled a Rs 2.11-lakh crore two-year road map to strengthen non-performing asset (NPA)-hit public sector banks, which includes recapitalisation bonds, budgetary support and equity dilution.

Addressing bankers, Jaitley said the government had decided to inject more capital in state-owned banks to strengthen the banking system and spur economic growth. The finance