The government on Monday sought Parliament's approval for infusing Rs 20,000 crore in public sector banks in the current financial year to meet regulatory requirements.
The government refrained from committing any capital in the Budget 2020-21 for the PSBs.
The government on Monday sought Parliament’s approval for infusing Rs 20,000 crore in public sector banks in the current financial year to meet regulatory requirements. This is part of the first batch of Supplementary Demands for Grants for 2020-21 moved by Finance Minister Nirmala Sitharaman 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.
“For meeting expenditure towards recapitalisation of Public Sector Banks through issue of Government Securities” the government has asked for Parliament’s authorisation of Rs 20,000 crore, as per a document. In 2019-20, the government proposed to make Rs 70,000 crore capital infusion into the Public Sector Banks (PSBs) to boost credit for a strong impetus to the economy. However, the government refrained from committing any capital in the Budget 2020-21 for the PSBs, hoping that the lenders will raise funds from the market depending on the requirements.
In addition, LIC-controlled IDBI Bank received additional capital of Rs 4,557 crore through the supplementary demands for grants. The government has also sought Rs 1,232 crore as subsidy to Small Industries Development Bank of India (SIDBI) on interest subvention of 2 per cent on prompt repayment of Shishu Loans extended under Pradhan Mantri Mudra Yojana (PMMY). Further, Sitharaman has sought approval of Parliament of Rs 4,000 crore for meeting an additional expenditure towards Grants-in-Aid General to National Credit Guarantee Trustee Company Limited (NCGTC) for the Guarantee Emergency Credit Line (GECL) facility to eligible MSME borrowers.