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Government to infuse Rs 20,000 crore in India's state-run banks

IBEF:  September 15, 2020

In April, the government had assured state banks that it is ready to provide capital support as the pandemic may lead to a surge in bad loans as economic growth slows and provided Rs 3.5 lakh crore since the last five years to rescue its banks.

The government sought Parliament's approval for infusing Rs 20,000 crore in public sector banks in the current financial year to meet regulatory requirements and is a part of the first batch of Supplementary Demands for Grants for 2020-21 moved by Finance Minister in the Lok Sabha.

In all, the government has sought Parliament's nod for additional spending of Rs 2.35 lakh crore, which includes a cash outgo of Rs 1.66 lakh crore, primarily to meet expenses for combating the COVID-19 pandemic.


In all, the government has sought the nod from Parliament for additional expenditure of Rs 2.35 lakh crore, which includes a cash outgoing of Rs 1.66 lakh crore, mainly to cover expenditure to tackle the COVID-19 pandemic

In order to meet the expenditure on recapitalization of public sector banks through issue of Government Securities, the government has requested the authorization of Rs 20,000 crore by the Parliament, as per

infusion into the Public Sector Banks (PSBs) to boost credit for a strong impetus to the economy.

The government proposed to infuse Rs 70,000 crore capital into the Public Sector Banks (PSBs) in 2019-20 to raise credit for a significant stimulus to the economy.

In the last financial year, Punjab National Bank got Rs 16,091 crore, Union Bank of India received Rs 11,768 crore while Canara Bank and Indian Bank got Rs 6,571 crore and Rs 2,534 crore, respectively.
Allahabad Bank received Rs 2,153 crore, United Bank of India got 1,666 crore and Andhra Bank received Rs 200 crore. These three lenders have been merged with various PSBs.

Besides, Bank of Baroda got a capital infusion of Rs 7,000 crore, Indian Overseas Bank received Rs 4,360 crore and UCO Bank got Rs 2,142 crore. Punjab & Sind Bank received Rs 787 crore and Central Bank of India got Rs 3,353 crore. In addition, LIC-controlled IDBI Bank received additional capital of Rs 4,557 crore through the supplementary demands for grants.

The government also sought Rs 1,232 crore as a subsidy to India's Small Industries Development Bank (SIDBI) at a 2 per cent interest on prompt repayment of Shishu loans provided under Pradhan Mantri Mudra Yojana (PMMY).

In addition, Sitharaman has sought Parliament 's approval of Rs 4,000 crore to meet additional expenditure on qualifying MSME borrowers against grants-in-aid general to National Credit Guarantee Trustee Company Limited (NCGTC) for the Emergency Credit Line (GECL) guarantee facility. 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.