Budget 2021: Government Recommends Rs 20,000-Crore Recapitalisation For PSBs In FY 2021-22

Finance Minister Nirmala Sitharaman on Monday said the government would infuse Rs 20,000 crore into public sector banks (PSBs) in 2021-22, to meet the regulatory norms.

For the current financial year also, the government had made a provision of Rs 20,000 crore for recapitalisation.

Unveiling the Budget 2021-22 in the Lok Sabha, the finance minister said the government has proposed to infuse Rs 20,000 crore into the PSBs, to further consolidate financial health of banks.

During 2019-20, the government had proposed to make Rs 70,000-crore capital infusion into the PSBs to boost credit for a strong impetus to the economy.

However, the government refrained from committing any capital for the PSBs in the Budget 2020-21, hoping that the lenders will raise funds from the market depending on the requirements.

Later, in September 2020, Parliament approved Rs 20,000 crore capital infusion for PSBs as part of the first batch of Supplementary Demands for Grants for 2020-21.

Of this, the government provided Rs 5,500 crore to Punjab & Sind Bank in November 2020, to meet the regulatory capital requirement.

In 2017-18, the government had infused Rs 90,000 crore, followed by Rs 1.06 lakh crore in 2018-19.

Ms Sitharaman proposed to divest two PSU banks and one general insurance company in FY21-22.

She said all divestments announced so far will be completed in FY22, including that of LIC IPO. BPCL, CONCOR, Pawan Hans and Air India.

The Union government set the FY22 divestment target of Rs 1.75 lakh crore.

The government will create a new list of companies for divestment, Ms Sitharaman said. In addition, it will form a special purpose vehicle (SPV) for monetising land owned by the government PSUs.