New Delhi:The finance ministry on Wednesday said it has not provided the entire amount towards capital infusion in public sector banks as most of them failed to meet the performance target.
As part of Indradhanush Plan to revitalize state-owned lenders, the government had proposed to infuse Rs70,000 crore out of budgetary allocations in them. The plan envisaged Rs25,000 crore each in 2015-16 and 2016-17 and Rs10,000 crore each in 2017-18 and 2018-19. So far, it has infused Rs51,858 crore in public sector banks.
The government allocated Rs22,915 crore in 13 public sector banks during 2016-17 under the first tranche of capital infusion out of which Rs16,414 crore or 75% was given upfront. “The remaining amount was to be infused based on the performance of the respective public sector banks. However, none of the banks could achieve the set targets and therefore, the remaining 25% of the allocated capital has not been released so far," the ministry said.
The PSBs in which capital infusion was made in 2016-17, include State Bank of India, Punjab National Bank, Canara Bank and Bank of India.
Earlier this year, finance minister Arun Jaitley had announced a Rs2.11 trillion capital infusion in public sector banks, including Rs1.35 trillion worth recapitalization bonds.
As per people aware of the matter, the government is working on the modalities for issuing the recapitalisation bonds as it aims to front-load the infusion with an aim to strengthen the state-owned banking sector. The 21 PSBs together account for about 70% of the market share.
The Nifty PSU index was down 1.15% on the National Stock Exchange.