Budget 2021: Government Proposes Rs 20,000-Crore Bank Recapitalisation In 2021-22
Pedestrians and an auto-rickshaw pass a State Bank of India Ltd. (SBI) branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Budget 2021: Government Proposes Rs 20,000-Crore Bank Recapitalisation In 2021-22

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Finance Minister Nirmala Sitharaman on Monday said the government would infuse Rs 20,000 crore into public sector banks in 2021-22, to meet regulatory norms.

For the current financial year also, the government had made a provision of Rs 20,000 crore for bank recapitalisation.

Unveiling the Union Budget 2021-22 in the Lok Sabha, the finance minister said the government has proposed to infuse Rs 20,000 crore into state-owned banks, to further consolidate their financial health.

Also read: Budget 2021: Government To Set Up Development Finance Institution

During 2019-20, the government had proposed to make a Rs 70,000-crore capital infusion into PSBs to boost credit for a strong impetus to the economy.

However, the government refrained from committing any capital to PSBs in Budget 2020-21, hoping that the lenders will raise funds from the market depending on their requirements.

Later, in September 2020, Parliament approved Rs 20,000 crore capital infusion for PSBs as part of the first batch of Supplementary Demands for Grants for 2020-21. Of this, the government provided Rs 5,500 crore to Punjab & Sind Bank in November 2020, to meet its regulatory capital requirement.

In 2017-18, the government had infused Rs 90,000 crore, followed by Rs 1.06 lakh crore in 2018-19.

Follow real-time analysis from BQ’s top editors Menaka Doshi, Ira Dugal, Sajeet Manghat and Niraj Shah here.

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