Recap exercise is to keep public sector banks in good health: Jaitley

AMN / New Delhi

Finance Minister Arun Jaitley today said that by recapitalisation of public sector banks, ednesday government was trying to build an institutional mechanism to ensure that the problems that occurred before, ones inherited by the current government, do not recur.

The FM’s address was in continuation to the announcement made in October last year about infusing Rs 2.1 lakh crore (around 1.2 percent of GDP) of capital in public sector banks over a period of two years.

The capital infusion will be funded through three sources — Rs 18,139 crore from budgetary provisions, Rs 58,000 crore from the market, as the government dilutes its stake, and Rs 1.35 lakh crore through recapitalisation bonds issued by the government.

While talking to the media on Wednesday, Jaitley said that the department of financial services has been undertaking a detailed exercise on how much capital to infuse in banks in the current financial year. He also said that the essence of this exercise was the government trying to keep PSBs in good health.