Government to begin fresh recapitalisation of ailing public sector banks

Zee Media Bureau

New Delhi: As early as Monday, the Centre is likely to announce the first tranche of the Rs 25,000 crore capital infusion for public sector banks (PSBs), planned for this financial year (2016-17), said a report.

The Hindu, quoting a Finance Ministry source, reported that the first tranche of capital infusion could add up to about Rs 10,000 crore. 

Suffering from high non-performing assets, the recapitalisation of PSU banks is expected to improve their lending capacity.

Gross bad loans, as a proportion of the total advances by these banks, rose to 7.6 per cent, a 12-year high in March 2016, according to the Reserve Bank of India’s latest financial stability report released on June 28. Indian PSU banks account for about 70 percent of the total banking system assets.

The paper added that the capitalisation plan proposes infusions adding up to Rs 25,000 crore in 2015-16 as well as in 2016-17, followed by Rs 10,000 crore each in 2017-18 and 2018-19.