NEW DELHI: Following last month’s announcement by finance minister Arun Jaitley to pump in Rs 2.11 lakh crore to the banking sector, about Rs 70,000 crore could be infused in NPA-hit public-sector banks in the next four months through recapitalisation bonds. The plan is part of strengthening the public-sector banks that are hit by raising bad loans.
Currently, the government is in the process of finalising the structure of bonds and decision in this regard could be made by the end of this month.The finance minister had said that there were multiple options before the government for recapitalisation bonds and they are being examined. Once the structure is in the place, the government would front-load bond issuance and the preliminary assessment indicates that it could be between Rs 70,000 crore and Rs 80,000 crore, according to sources.
Bad loans of public-sector banks alone shot up from Rs 2.75 lakh crore in March 2015 to Rs 7.33 lakh crore as of June 2017.Besides recapitalisation bonds, the finance minister had announced that banks would get about Rs 18,000 crore under the Indradhanush plan over the next two years.
Under the Indradhanush roadmap announced in 2015, the government had announced infusion of 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 in line with global risk norms, known as Basel-III.In the past three-and-a-half years, the government has pumped in Rs 51,858 crore capital in the public-sector banks.