Bloomberg
State Bank of India and Punjab National Bank will be among lenders that receive 881 billion rupees ($14 billion) of fresh capital the government had pledged for state-run banks in the year through March 31.
SBI, the nation’s biggest lender by assets, will get 88 billion rupees while Punjab National Bank will take 55 billion rupees, Rajiv Kumar, banking secretary at India’s Finance Ministry, said at a briefing on Wednesday. Prime Minister Narendra Modi’s administration had sought lawmaker approval to sell 800 billion rupees worth of recapitalisation bonds before the end of the financial year as part of
a two-year plan to bolster lenders’ risk buffers.
The capital injection will help banks meet regulatory requirements as they provision for stressed assets that are weighing down their balance sheets. The government is hoping that a stronger banking system will help in bolstering loan growth, which had fallen to a 25-year low in
2017, slowing the pace of economic expansion.
“The infusion takes care of regulatory requirements of all banks and therefore there is no issue on capital adequacy,†Kumar said. “This will take care of growth also.â€