India approves 3.4-billion-dollar bank recapitalisation plan

NEW DELHI: India approved a plan on Friday to provide $3.4 billion to recapitalise several state banks in a bid to spur lending in Asia's third biggest economy.

The federal cabinet gave the green light to the plan to inject Rs 150 billion ($3.4 billion) into the banks in the financial year that began on April 1, a government statement said, according to Dow Jones.

"The infusion of Rs 150 billion in Tier-I capital instruments of public sector banks would enable them to expand their credit growth by about 1.85 trillion rupees," the statement said.

India has negotiated with the Washington-based World Bank for a loan of $ 3.2 billion to part-fund the recapitalisation.

"Formalities in respect of the first tranche of a $ 2.0 billion loan have already been completed," the statement added.