The Centre has infused Rs 22,915 crore in Public Sector Banks (PSBs) to ensure that they can step up credit, with the SBI getting the maximum Rs 7,575 crore followed by Indian Overseas Bank getting Rs 3,101 crore.
The move has come (in 2016-17) to help 13 public sector banks that are burdened with non-performing loans, to help improve their liquidity and support lending operations.
“The capital infusion exercise for the current year is based on an assessment of need as assessed from the CAGR of credit growth for last five years, banks’ own projections of credit growth and an objective assessment of the potential for growth of each Public Sector Bank,” the finance ministry said in a statement.
According to the ministry, as much as 75% of the amount allocated is being released now to provide liquidity support for lending operations as also to enable banks to raise funds from the market.
The rest of the amount will be released based on performance, with particular reference to greater efficiency, growth of both credit and deposits and reduction in the cost of operations.