Govt may create holding firm for banks to issue recapitalisation bonds

The government is looking at transferring its equity in public sector banks into a holding company, and it is this holding company that may issue the Rs 1.35 lakh crore of recapitalisation bonds to turnaround the ailing PSU banks.

Sources say this holding co structure is the most preferred option as of now, and will also prevent any spike in the fiscal deficit.

The government two days ago had announced a mega Rs 2.11 lakh cr plan to recap banks, of which Rs 1.35 lakh cr will be via bonds.