(LiveMint)
The government on Thursday sought Parliament’s nod for an additional spending of Rs80,000 crore for capitalizing state-run banks through issue of government securities.However, this expenditure will be met through enhanced receipts, the government said in its third supplementary demand for grants tabled in the Lok Sabha, indicating that this additional expenditure will not impact fiscal deficit.
Last year, the finance ministry had announced a Rs2.11 trillion bank recapitalisation plan for state-owned lenders looking to boost bank balancesheets hit by rising bad loans to ensure flow of credit to important sectors of the economy. Out of Rs2.11 trillion, Rs1.35 trillion was to come from the sale of so-called recapitalisation bonds and the remaining Rs76,000 crore through budgetary allocation and fund-raising from the markets. Indian banks are weighed down by stressed assets of close to Rs10 trillion. Of this, gross non-performing assets (NPAs) account for Rs7.7 trillion and the rest are restructured loans
