Indian government is planning to infuse nearly INR570bn ($9bn) in public sector banks over the next two fiscal to meet global risk norms and for growth, finance secretary Rajiv Mehrishi revealed.
"What we are aiming at is an infusion of about $3bn in the current year and perhaps twice as much in the next year. So, that is the broad time schedule – whether it will happen in August or January I can’t say," Mehrishi told CNBC TV in an interview.
"It doesn’t have to wait for the Budget because it is a process that is ongoing and we can always seek additional funds within the supplementaries.
"We have already some budget allocation provision there, we can use that to begin with and that is a billion dollar plus and we intend to increase that", he added.
The government has allocated INR79.4bn in the budget for recapitalisation of state-owned banks, which have 70% share in lending and are facing difficulty due to rise in non-performing loans, for the fiscal 2015-2016.
The country’s finance minister Arun Jaitley said: "Banks have made a strong case for additional capital… And over the next few months, this is something the government is going to seriously look at."
The central government has started assessment of capital requirement of the banks and has already received presentation from six public sector banks.