The government proposed to lower capital infusion in public sector banks in its interim budget on Monday, saying it should be able to raise their own funds and depend less on government money.
The move, however, left banks, including country’s largest public sector lender State Bank of India disappointed and banking shares were also hit.
“I am signalling that it is good corporate and business practice to be able to raise your own capital... I would urge banks to raise their own capital,” Finance Minister P Chidambaram said in his post-Budget interaction.
Capital infusion in PSBs this year has been cut to Rs 11,200 crore in 2014-15 from Rs 14,000 crore last year.
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