The Government on Friday sought Parliamentary approval to infuse Rs 12,010 crore in public sector banks. Details about bank wise infusion will be made later.

This is part of the proposal for additional expenditure, better known as Supplementary Demands for Grants, tabled in the Lok Sabha by the Finance Minister, Arun Jaitley.

The proposal involves total additional expenditure of Rs 40,821.88 crore. Out of this, net cash outgo will be Rs 25,495.24 crore, while the remaining Rs 15,325.62 crore will be met through savings.

The proposal also involves about Rs 100-crore equity infusion in MUDRA Bank, while additional Rs 500 crore will be made available for credit guarantee fund for Pradhan Mantri Mudra Yojana. MUDRA aims to provide credit to very small businesses.

The Government has also made a provision of Rs 800 crore as equity infusion for Air India, while Rs 2,685 crore has been provided for sanitation and drinking water. About Rs 1,000 crore will be made available for Power System Development Fund, while Rs 1,153 crore will for Indian Strategic Petroleum Reserves Ltd.

Bank Recapitalisation

Later in a press statement, the Finance Ministry said that Rs 25,000 crore will be provided during current fiscal. Apart from provision of Rs 12,010 crore made today, the Budget provided Rs 7,940 crore. The remaining Rs.5,000 crore would be provided in the second supplementary later this year, it said.

The additional capital this year will be allocated through three tranches to meet three different objectives. In the first tranche, about 40 per cent of this amount will be given to those banks which require support, and every single PSB will be brought to the level of at least 7.5 per cent by the financial year 2016.

In the second tranche, 40 per cent capital will be allocated to the top six big banks viz. SBI, BoB, BoI, PNB, Canara Bank, and IDBI Bank to strengthen them to play a vital role in the economy.

The remaining 20 per cent will be allocated in the third tranche. Banks will get this amount based on their performance during the three quarters in the current year and will be judged on the basis of certain performance. This will incentivise them to improve their performance in the current year.

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