Government to enhance bank recapitalisation outlay to Rs 1.06 lakh crore in current fiscal

New Delhi: Government has moved proposal in Parliament for enhanced bank recapitalisation outlay from Rs 65,000 crore to Rs 1,06,000 crore in the current financial year to propel economic growth.

This would enable infusion of over Rs 83,000 crore in the coming few months in Public Sector Banks (PSBs).

Government said that the enhanced provision is aimed at meeting regulatory capital norms, providing capital to better-performing PCA Banks, facilitating non-PCA banks that are in breach of some PCA thresholds to not be in breach and strengthen amalgamating banks by providing regulatory and growth capital.

“Following comprehensive clean-up of the banking system under Government’s 4R’s approach of Recognition, Resolution, Recapitalisation and Reforms, the envisaged recapitalisation would equip banks financially at levels higher than the global norms” an offiial release said.

In this connection, it is pertinent that India’s capital norms for banks are 1 percent higher than the norms recommended under the global Basel-III framework, it added.

Further, unlike the early intervention regime of other major economies, India’s PCA framework for weaker banks has more onerous thresholds, viz., higher capital thresholds and a Net NPA threshold that further embeds capital requirement on account of provisioning of NPAs.