Govt to infuse remaining Rs 83,000 crore in PSBs within three months: Jaitley

New Delhi, Dec 21 (KNN) While the government has already infused Rs 23,000 crore into public sector banks (PSBs) this year, the remaining Rs 83,000 crore will be provided in the remaining three months of 2018-19, Finance Minister Arun Jaitley said.

The capital will be pumped in over the next few months, Jaitley said adding that the move will increase the lending capacity of PSBs as well as help some of them come out of RBI's watch list.

The government will infuse additional Rs 41,000 crore in to PSBs, making the total amount for bank recapitalization at Rs 1.06 lakh crore in financial year 2018-19.

“More capital will take some PSBs out of PCA (prompt corrective action) framework…Capital infusion will also happen for those banks which are up for merger," Jaitley told reporters.

“It is almost complete and at a time where it had peaked in March 2015, the non-recognition was to the extent of 7 percent. Now that is about 0.59% percent. So a high provisioning has already been made by the banks as a result of disciplining, which has taken place in last few years,” Jaitley said.

“Last quarter has shown the improved performance this entire exercise will lead to increase lending capacity of banks,” Jaitley said.

Timeline for capital infusion will be decided after assessing the profit and loss statements during July-September and October-December quarter.

The fund infusion into banks will fall into four categories- meeting regulatory capital norms, providing capital to better-performing PCA banks to achieve 9 percent capital to risk-weighted asset ratio (CRAR); 1.875 percent capital conservation buffer and the 6 percent net NPA threshold, facilitating them to come out of PCA.

The third category will be the non-PCA banks very close to the PCA red-line will be provided capital so that they don’t come under PCA. Besides, some capital will be provided to strengthen amalgamating banks by providing regulatory and growth capital.