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Fund infusion into public sector banks

Public sector banks may get a new round of capital infusion, according to banking sector analysts. These could come in the form of fresh budgetary support once the new government take over charge. The finance ministry had earlier directed these banks to finalize their plans to raise capital so that they can improve their operations and plan expansion. The outgoing government had provided around Rs 11,200 crore in the budget for recapitalization of these banks but it was felt that this amount would be insufficient. Hence there could be a review in the forthcoming budget of the new government. Infusion of funds would help these banks to offer loans to customers at reasonable interest rates, which can support economic growthy. According to the Reserve Bank of India, an additional Rs. 5 lakh crore would be required by banks to meet the stringent Basel III norms by March 2019, under which all banks will have to shore up their capital adequacy ratio. The government has infused over Rs 20,000 crore into public sector banks between 2010 and 2012.

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