Budget: Capital infusion in public sector banks undershoots market expectations

KOLKATA: The government has infused Rs 5,500 crore in public sector banks so far this fiscal, out of Rs 20,000 crore outlay for this year, while the finance minister proposed another Rs 20,000 crore infusion for 2021-22.

The new capital infusion proposal is lower than what market was anticipating. "Rs 20,000 crore (recapitalisation proposal) is a relief for public sector banks, albeit a little lower than expectation," said Veena Sivaramakrishnan, partner, Shardul Amarchand Mangaldas & Co.

For the records, the government had injected Rs 80,000 crore in 2017-18, Rs 1.06 lakh crore in 2018-19 and Rs 65,443 crore in 2019-20 in the banks it owns.


In 2020-21, the government infused Rs 5,500 crore as fresh capital in PSBs through non-interest bearing special securities. It has also infused capital through issue of bonds in three other banks—IDBI Bank (Rs 4,557 crore), India EXIM Bank (Rs 5,050 crore) and IIFCL (Rs 5,297.60 crore).