In October, government had announced a Rs 2.11- trillion capital infusion into the NPA-hit public sector banks over the next two years. Of this, Rs 1.35 trillion will be through recapitalisation bonds a small portion of which will also come from capital markets, and the remainder Rs 76,000 crore will come from the budgetary support.
"This will be reform and a recap package and not just a recap package, so as to ensure that this money is used to strengthen public sector banks' balance sheets and that we don't sow the seeds of the next boom and bust cycle of lending," Patel told reporters.
The Governor also said the central bank is working closely with the financial services department to finalise the extent of funding for each bank and the amount of recap bonds to be on banks' balance sheets as government's equity contribution.
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