Government will infuse Rs 70,000 crore in state-run banks over four years, while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirements.
The government has laid out the four-year programme for Rs 1.8 lakh crore capitalisation of public sector banks with a view to boosting investment and growth in the economy, Finance Minister Arun Jaitley said.
"It is a long overdue step. Government in the past has talked about it. But this time government is actually implementing it," he said in a statement.
This will boost investment and growth in India, he added.
Public sector banks will need to raise Rs 1.10 lakh crore from markets to meet more than half of their capital requirement of Rs 1.80 lakh crore over the next four years.
Of the total estimated by the Finance Ministry, the government is willing to provide only Rs 70,000 crore - Rs 25,000 crore each in current as well as the next fiscal and Rs 10,000 crore each in 2017-18 and 2018-19.
"Improved valuations coupled with value unlocking from non-core assets as well as improvements in capital productivity will enable PSBs to raise the remaining Rs 1,10,000 crore from the market," a Finance Ministry statement said.
Earlier in the day, Jaitley sought Parliament's nod for additional capital infusion of Rs 12,010 crore in PSU banks. Along with the Budget provision of Rs 7,940 crore, the total planned capital infusion would go up to around Rs 20,000 crore.
"Rs 20,000 crore (capital infusion) would happen as early as possible. It can happen by September after we get approval from Parliament," Financial Services Secretary Hasmukh Adhia told reporters here.
The remaining Rs 5,000 crore would be provided in the second Supplementary later this year. "The Rs 25,000 crore capital this year will be allocated through three tranches," the ministry's statement said.
