InvestorQ : Is it true that the government may recapitalize banks to the tune of Rs.20,000 crore?
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Is it true that the government may recapitalize banks to the tune of Rs.20,000 crore?

Answer
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Deepa Salunkhe answered.
1 week ago


Government has sought parliamentary approval to infuse Rs.20,000 crore into the beleaguered PSU banks in the current fiscal. This is likely to help the PSU banks partly offset the lag effect of the pandemic.

RBI has already warned that the pandemic could push the gross NPAs of the Indian banking system from 8.5% in Mar-20 to 12.5% in Mar-21. If the Rs.20,000 crore infusion is approved then the government would have infused Rs.370,000 crore into PSU banks in the last five years.

Union Budget 2020 had not allocated funds to recapitalization expecting that market fundraising should be possible. However, COVID-19 came as a Black Swan event. Interestingly, the centre has sought an additional spending limit of Rs.167,000 crore from Parliament.