Of the Rs 1.80 lakh crore capital requirement estimated by the Finance Ministry, the government would be providing Rs 70,000 crore -- Rs 25,000 crore each in current and next fiscal and Rs 10,000 crore each in 2017-18 and 2018-19.
Jaitley further said the new system to hire best talent, including from the private sector professionals, at top posts in the state-run banks will go a long way in improving the performance of public sector banks which are "lifeline of the economy".
"Managements are going to be increasingly professionalised. The fact that government administers them does not mean that government can appoint anyone. Therefore, a very strict appointment procedure, to get the best talent from within and outside has now been followed," he said.
Jaitley said that under the new professional level of management of these banks, they will be able to respond to the expanding commitments of the Indian economy.
He said the sectors like steel, power, discoms and highways were among those which generated high NPA.
"And the reasons were partly domestic and partly external to the economy. Now each of these sectors is being addressed one by one," Jaitley said.
Public sector banks are saddled with the gross Non Performing Assets (NPAs) of Rs 2.67 lakh crore at the end of March 2015. The gross NPA of the all banks was Rs 3.09 lakh crore.
Referring to nationalised banks, the Finance Minister said they are trustees of public money and therefore, the people have right to insist that banks are administered in the most effective manner and in most correct banking manner.
"The banking network is expanding hugely. Infact the health of the banks itself reflects on the challenges for the economy. Therefore, while on one hand we can take some satisfaction in the fact that networks are expanding across the country, huge amount of activity which is still to be done.
"Fortunately we now have the advantage and benefit of technology which will take banking to every corner of the society... More and more banking is going to be enabled by technology," he said.
Talking about the Jan Dhan financial inclusion programme of the government, Jaitley said in the "huge monumental success" of the scheme employees of PSU banks played the most critical role.
Jaitley said when the scheme started very accounts had balance in them, but now the number has increased significantly.
"You started off with a very few accounts with a balance and now you have more than 56 per cents accounts with a balance and the Department of Financial Services tells me that over the next few months this figure is also going to expand very rapidly particularly when more and more programmes are going to come within the ambit of the DBT scheme," he said.
