The Financae Minister Mr.Arun Jaitley, said that Cabinet approves 2.11 lakh crore recapitalization package to public sector banks. Of 2.11 crore, Rs 1.35 lakh crore will come from recap bonds, while the rest will come from the market and budgetary support.Finance minister informed that the entire Rs 2.11 lakh crore of capitalisation will be spread over this fiscal year and the next.Jaitley says that whether or not the recapitalisation bonds will impact fiscal deficit is a function of what the nature of the bond will be and which agency issues the bonds. But even if it is a part of the fiscal deficit, it will be in the larger interest of the nation.
The finance Minister further said that the recapitalisation of PSU banks will be accompanied by a host of banking sector reforms that will be detailed by the government at a later date.The minister said it is essential to increase public spending on infrastructure, and that expenditure on infrastructure is taking place at an unprecedented level at the moment.
Between 2014-15 and 2017-18, banks have made provisions of over Rs 3 lakh crore, more than 10 times the amount made in the preceding 10 years.
