Government to infuse Rs55,000 cr in public sector banks in a week
12 September 2019
The government will, in a week’s time, infuse Rs55,000-cr capital in 10 public sector banks (PSBs) that are being consolidated to form four large banks, so that they can confidently operate on a sustainable basis.
Announcing the merger plan for PSBs last month, finance minister Nirmala Sitharaman also proposed to infuse Rs55,000 crore into the 10 banks that are to be consolidated into 4 large banks, in a recapitalisation move.
As per the fund infusion plan, Punjab National Bank will get Rs16,000 crore, Union Bank of India Rs11,700 crore, Canara Bank Rs6,500 crore, Indian Bank Rs2,500 crore, Bank of Baroda Rs7,000 crore, Indian Overseas Bank Rs3,800 crore and Central Bank of India Rs3,300 crore.
As per the merger plan, Punjb National Bank, Oriental Bank and United Bank will be merged to form the second largest PSB while Canara Bank and Syndicate Bank will merge into one entity to form the fourth largest PSB, Union Bank of India, Andhra Bank and Corporation Bank will merge to form the fifth largest PSB, and Indian Bank and Allahabad Bank will merge to form the seventh largest PSB.
Over the last four financial years, the government has been taking comprehensive steps to strengthen public sector banks, under the government’s 4R’s strategy of recognising NPAs transparently, resolving and recovering value from stressed accounts through clean and effective laws and processes, recapitalising banks, and reforming banks through the PSB Reforms Agenda.
PSBs have been recapitalised to the extent of Rs2.87 lakh crore, with infusion of Rs2.20 lakh crore by the government and mobilisation of over Rs0.66 lakh crore by PSBs themselves.