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Govt infuses Rs 22,915 crore in PSU banks

CurrencyThe central government has infused Rs 22,915 crore into 13 state-run banks. Of these banks, the State Bank of India (SBI) will receive the largest allocation of Rs7,575 crore. Indian Overseas Bank and Punjab National Bank will get Rs 3,191 crore and Rs 2,816 crore respectively. The banks required recapitalization based on an assessment of the CAGR of credit growth for the last five years and the banks’ projections of credit growth. The finance ministry said 75% of the amount required by each bank is being released now to provide liquidity support for lending operations as also to enable banks to raise funds from the market. The remaining amount, to be released later, will be linked to performance. The government has made a provision of Rs 25,000 crore in the budget for the capitalization of public sector banks in the current financial year, in line with the infusion plans announced under the umbrella scheme Indradhanush. SBI chairperson Arundhati Bhattacharya welcomed the announcement and described it as very timely. She said the funds will help the banks in increasing their lending, raising additional funds and clean up balance sheets.

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