Budget 2012: Government proposes Rs 15,888 cr capitalisation for PSU banks

MUMBAI: The government has allocated Rs 15,888 crore for investment in the public sector banks through a holding company route. It will help regional rural banks and National Bank for Agriculture and Rural Development during the next financial year to lend more and accelerate government's financial inclusion agenda.

Post this news, shares of public sector banks rallied sharply on the stock exchange. The banking index rose 1.19%.

The government has proposed a holding company structure for public sector banks. In addition, the government proposed to raise the target for agricultural credit to Rs 5.75 lakh crore for this fiscal from Rs 4.75 lakh crore. Also, Rs 10,000 crore has been allocated to refinance RRBs to lend to small farmers.

State Bank of India gained 0.4%, Bank of India went up 1.98% while Bank of Baroda dropped by 0.39% on the Bombay Stock Exchange.