The government pursued Parliament’s approval to infuse Rs 20,000 crore in public sector banks for the current financial year in order to fulfill regulatory needs. It was a part of an initial batch of Supplementary Demands for Grants for 2020-21 moved by the Indian Finance Minister in the Lok Sabha. The government has sought Parliament’s positive indication for additional spending of Rs 2.35 lakh crore primarily to meet expenses for combating the COVID-19 pandemic.
According to an official document, “For meeting expenditure towards recapitalisation of Public Sector Banks through issue of Government Securities, the government has asked for Parliament’s authorisation of Rs 20,000 crore.”
For the year 2019-20, the government had offered to make Rs 70,000 crore capital infusion into the Public Sector Banks (PSBs) to motivate credit for a strong propulsion of the economy. Whereas, the government abstained from committing any capital for the same in the Budget 2020-21.
In the last financial year, Punjab National Bank received an amount of Rs 16,091 crore, Union Bank of India got Rs 11,768 crore, Canara Bank and Indian Bank were granted Rs 6,571 crore and Rs 2,534 crore, respectively. Apart from this, other banks like Bank of Baroda got a capital infusion of Rs 7,000 crore, Indian Overseas Bank received Rs 4,360 crore and UCO Bank got Rs 2,142 crore. Punjab & Sind Bank was allocated Rs 787 crore and the Central Bank of India received Rs 3,353 crore.
Additionally, LIC-controlled IDBI Bank got surplus capital of Rs 4,557 crore through the supplementary demands for grants. Further, Nirmala Sitharaman has sought approval of Parliament for Rs 4,000 crore to fulfil additional expenditure for Grants-in-Aid General to NCGTC for the Guarantee Emergency Credit Line (GECL) service to eligible MSME borrowers.