Under fire for the under performing economy, the Narendra Modi government on Tuesday announced a Rs 2.11 lakh crore plan to recapitalise public sector banks over the next two years in an attempt to clean their books and revive investments.
Of the planned recapitalisation amount, recapitalisation bonds will account for Rs 1.35 lakh crore, while Rs 76,000 crore will come from budgetary support and equity issuance, a top government official said.
Besides bank recapitalisation, the Union Cabinet, at a meeting chaired by Prime Minister Narendra Modi, also approved the ambitious BharatMala Project that entails an expenditure of nearly Rs 7 lakh crore to build 83,677 kms of roads over the next five years.
Addressing a press conference here, Finance Minister Arun Jaitley said the recapitalisation of public sector banks will be followed by a series of banking reforms. He said the government had already taken steps in that direction by amending the SARFAESI Act, introducing the Insolvency Code and merging SBI subsidiaries.
The government will announce the modalities of raising the required funds through a bond programme during the course of time, he said.
Rajiv Kumar, the Financial Services Secretary in the Ministry of Finance, said public sector banks were ready to take off due to strong economic fundamentals and push to public investment in infrastructure and strengthening the country’s banking system will result in more jobs, growth and investments.
Cabinet approvals
Cabinet approves an unprecedented capitalisation plan of Rs 2,11,000 crore for public banks
Of this, Rs 76,000 crore will come from budgetary support
Govt to raise Rs 1.35 lakh crore from bonds
Govt committed to maintain fiscal deficit at 3.2% for FY18
83,677-km roads to be built at Rs 6.92 lakh crore over five years
DH News
