The government will seek additional USD 3 billion (about Rs 14,440 crore) from the World Bank to infuse funds into public sector banks to shore up their capital against various risks to ensure credit flow to productive sectors to beat the economic slowdown.
This is the part of USD 4.2 billion (about Rs 20,160 crore) additional fund that India is seeking over and above the permissible annual grant to the country.
"We have sought additional World Bank funding over and above what is normally admissible every year additional to the extent of USD 4.2 billion. Of that USD 3 billion has been sought for the recapitalisation of the banks over the period of about two years," Department of Economic Affairs Secretary Ashok Chawala said in a post interim-budget conference.
The process is currently in the pipeline and appropriate provision and inclusion would be made in the Budget statement as we go along during the year," he said.
In his interim-budget speech during the day Finance Minister Pranab Mukherjee said "government would recapitalise the public sector banks over the next two years to enable them to maintain Capital to Risk Weighted Assets Ratio (CRAR) of 12 per cent to ensure credit growth continues to sustain economic growth."