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finance | IST

Government announces Rs 11,336 crore capital infusion in five banks

The government has announced a capital infusion of Rs 11,336 crore capital infusion in five banks.
The banks are as follows:
  • Punjab National Bank
  • Indian Overseas Bank
  • Andhra Bank
  • Corporation Bank
  • Allahabad Bank
  • The fresh round of capital infusion of between Rs 8,000 and Rs 10,000 crore may take place within this week, or latest by the next, in these public sector banks (PSBs). Last October, the Union Cabinet approved a Rs 2.11 lakh crore recapitalisation plan for PSBs.
    In January this year, the government notified the recapitalisation bonds to allocate Rs 80,000 crore to 20 of these state-run banks. The bonds, split into six instalments, bear interest rates between 7.35 per cent and 7.68 per cent and will mature between 2028 and 2033.
    The State Bank of India (SBI) will receive the biggest share of capital from the recapitalisation bonds, estimated at Rs 8,800 crore, followed by the IDBI Bank at Rs 7,881 crore and the Bank of Baroda at 6,975 crore.
    As per the plan, PSBs are to get Rs 1.35 lakh crore through recapitalisation bonds, and the balance Rs 58,000 crore through raising of capital from the market.
    The NPAs in the Indian banking system have reached a staggering level of Rs 9 lakh crore, while the bad loans of only the state-run banks add up to nearly Rs 8 lakh crore. The government has embarked on a two-pronged strategy on bad loans.
    (This story will be updated with details)
    (With inputs from IANS)