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Business News/ Industry / Banking/  Public sector banks: Government to soon finalise 2nd tranche of capital infusion
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Public sector banks: Government to soon finalise 2nd tranche of capital infusion

The government has already announced a fund infusion of Rs22,915 crore, out of the Rs25,000 crore earmarked for 13 public sector banks for the current fiscal

Under Indradhanush roadmap announced last year, the government will infuse Rs70,000 crore in state banks over four years. Photo: MintPremium
Under Indradhanush roadmap announced last year, the government will infuse Rs70,000 crore in state banks over four years. Photo: Mint

New Delhi: Finance ministry is likely to finalise the second tranche of capital infusion in public sector banks (PSBs) in the next three weeks. The decision on the second round of capital infusion is slated to be crystallised before the Budget, people aware of the development said.

The government has already announced fund infusion of Rs22,915 crore, out of the Rs25,000 crore earmarked for 13 PSBs for the current fiscal. Of this, 75% has already been released to them. The remaining amount will be linked to performance with particular reference to greater efficiency, growth of both credit and deposits and reduction in the cost of operations, the finance ministry had said.

Also Read: Demonetisation may lead to temporary economic slowdown: Pranab Mukherjee

The first tranche was announced with the objective of enhancing their lending operations and enabling them to raise more money from the market. The capital infusion exercise for the current fiscal is based on an assessment of the compounded annual growth rate (CAGR) of credit growth for the last five years, banks’ own projections of credit growth and an objective assessment of the potential for growth of each PSB, it had said.

Also Read: Demonetisation deadline has passed, but the pain hasn’t

Under Indradhanush roadmap announced last year, the government will infuse Rs70,000 crore in state banks over four years while they will have to raise a further Rs1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms Basel-III.

In line with the blueprint, PSU banks are to get Rs25,000 crore each in 2015-16 and 2016-17 fiscal. Besides, Rs10,000 crore each would be infused in 2017-18 and 2018-19.

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Published: 05 Jan 2017, 09:19 PM IST
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