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A top finance ministry official on Saturday categorically ruled out accessing World Bank funds to recapitalise state-run banks, saying enough money has already been budgeted for this purpose.
“Absolutely not,” was financial services secretary Rajiv Takru’s terse response when reporters asked him whether the government will seek a World Bank loan to infuse capital into the 26 public sector banks (PSBs).
“We have already given the banks Rs 14,000 crore and will give more. We don’t want any money from the World Bank to give to the banks as we have made enough provisions in the Budget for this,” he reporters on the sidelines of a Ficci event here.
Earlier this week, the finance ministry had announced a Rs 14,000 crore capital infusion for banks. It had also said under a special scheme approved by the ministry, PSBs were asked to lend at lower rates to a slew of consumer products.
Under the capital infusion programme, SBI will get
Rs 2,000 crore, while IDBI Bank and Central Bank of India will get Rs 1,800 crore each. All PSBs, except Indian Bank — which does not need fresh equity capital this year — will be getting funds ranging between Rs 100 crore and Rs 2,000 crore.
The government uses the National Investment Fund to recapitalise its banks. Takru said the second round of infusion may come in Q4 depending on each bank’s requirement. “We will be giving them more after judging their performance based on concessional lending towards home, auto and consumer durables. The scheme will last till January-end.” he said.