The RBI, at its monetary policy review, had expressed concern over slowing growth. It has also, from time to time, pointed out that state-owned banks need to be well capitalised to be able to grow their loan books.
According to a rough estimate, public sector banks (PSBs) will require anywhere between R5 lakh crore and R8 lakh crore in the next five years to be able to meet the Basel-III requirements ? R5 lakh crore if they grow their books at 15% and R8 lakh crore if you assume a growth of 20% per annum.
The central bank, it would appear, is not averse to the government diluting its stake in the banks if it is unable to inject the necessary capital. In FY14, the government allocated R11,400 crore for state-owned banks.