The Government of India is set to provide the public sector banks (PSBs) with fresh capital of around INR700bn ($10.2bn) as a part of its plan to boost lending in the country.

The move was announced by Indian Finance Minister Nirmala Sitharaman in her maiden budget speech.

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The decision comes at a time when several state-owned lenders are struggling with bad debts, affecting their lending capabilities.

The minister added that the banks will leverage new technology to bolster doorstep banking and online personal loan services. The government is also taking measures to enable the PSB customers’ access banking services through any state-owned lender.

Further reforms will also be undertaken to strengthen governance of PSBs, Sitharaman said.

The budget includes proposals to provide the customers with greater control over cash deposits by others in their accounts.

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India has previously announced several bank recapitalisations in recent years to support the banking sector of the country.

The Bank of Baroda merger and consolidation of all State Bank of India subsidiaries with the parent company were also completed in the last two years. These efforts reduced the number of public sector banks by eight.

In her budget speech, Sitharaman said the NPAs of commercial banks dropped by more than INR1 trillion last year.

Additionally, six banks came out of the Prompt Corrective Action framework.

The budget also proposed to provide Reserve Bank of India with greater authority over the Non-Banking Financial Companies.