Govt seeks Parliament nod for Rs 20,000 crore capital infusion in public sector banks

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.

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.

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“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 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 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.