RBI Governor Raghuram Rajan on Friday said Rs25,000 crore of capital infusion planned by the Government in public sector banks this fiscal is “adequate and a good beginning”.
While Finance Minister Arun Jaitley had in Budget for 2015-16 provided Rs7,940 crore towards recapitalisation of PSU banks, he on Friday sought Parliament nod for another Rs12,010 crore in the first supplementary demand for grants.
Another Rs5,000 crore will be provided in subsequent supplementary demand through the year totaling Rs25,000 crore of capital infusion.
“Allocation for first-year recapitalisation is adequate,” Rajan said when asked to comment on the infusion plan.
“It’s a good beginning,” he said after his customary meeting with Jaitley ahead of the third bi-monthly monetary policy on August 4. The Finance Ministry, in a statement, said public sector banks (PSBs) as of now are “adequately capitalised”, but would need Rs1,80,000 crore extra capital over the next four years (up to FY19).
Of this, the Government plans to provide Rs70,000 crore through budgetary support -- Rs25,000 crore each in current and next fiscals and Rs10,000 crore each in 2017-18 and 2018-19.
Banks would be required to raise the remaining amount of Rs1.1 lakh crore from the market, the statement said.
RBI Deputy Governor R Gandhi said the decision to infuse Rs70,000 crore over the next four years was a welcome move by the Government.