The Indian government is planning to infuse $11bn of capital into debt-struck state banks over the next four years, Reuters has reported.
The government intends to pump INR250bn ($3.9bn) each in the current and next fiscal year, and INR200bn during 2017/18 and 2018/19.
An amount of $1.24bn has already been allocated for the state banks in the government’s February 2015 budget, with plans now on to inject an additional $1.9bn depending on approval from the country’s parliament.
State Bank of India, Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank, and IDBI will receive $1.6bn.
Every bank will receive financial assistance from the government, with 20% of the allocation associated with performance.
The move aims to address the issue of high levels of non-performing assets in state-run banks, which makes it hard to revive investment or speed up growth.
According to estimates from the finance ministry, banks are required to raise nearly $17bn to meet total funding needs of about $28bn beyond anticipated profits.