Finance Minister Arun Jaitley on Wednesday said the government will pump Rs 70,000 crore into ailing public sector banks to improve their financial health and increase their lending capacity. Besides, the PSU lenders will also be allowed to raise capital to the tune of Rs 1.10 lakh crore from the open market.
The minister said this while replying to the discussion on supplementary demand for grants in the Lok Sabha which approved an additional spend of Rs 40,821.88 crore, close to a third of which was towards recapitalisation of state-owned banks.
“Both, the banks that need capital the most and the performing ones will get capital support. I don’t want performing banks to be discriminated against. The performing banks have to be rewarded. It will improve their capacity to leverage and lend more,” Jaitley said. The Lok Sabha later approved the first batch of supplementary demand for grants for 2015-16 through a voice vote.
The net cash outgo will aggregate Rs 25,495.24 crore, while the remaining sum will come through savings and enhanced recoveries.