The Government of India has decided to infuse around INR880bn ($13.86bn) capital in 20 public sector banks (PSBs) by the end of March this year in an attempt to improve their performance and growth.
The announcement forms as a part of the bank recapitalisation plan announced in October 2017.
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Under the capital infusion plan for this financial year 2017-18, the government will provide INR80bn through Recap Bonds and INR8.1bn as budgetary support.
As a part of the plan, IDBI Bank and Bank of India, both of which are placed under prompt corrective action (PCA) by Reserve Bank of India will receive the highest share of capital infusion from the government.
The recap would be accompanied by a reforms package including six themes with 30 action points, as recommended by a panel comprising senior management of PSBs and representatives from the government.
The government also announced that an independent agency will conduct a survey to assess public perception on improvements in access and service quality of the PSUs.
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By GlobalDataResults of the survey will be published annually.
The new reforms is aimed at strengthening the PSBs, boost lending to micro, small and medium enterprises (MSME) and facilitate banking transactions with MSME and retail customers.
It also intends to increase banking access throughout the country by ensuring such services within 5kms of every village, facilitate refund within 10 days of any unauthorised debit in electronic transactions and a mobile ATM in every underserved district.
