FinMin to issue recapitalisation bonds to PSBs in Jan

The Ministry of Finance is likely to issue the first tranche of recapitalisation bonds to public sector banks (PSB) in early January, official sources from the ministry have confirmed.

The recapitalisation bonds will not be sold in open market and will be issued to all banks.

Apart from this, the government will also infuse capital worth Rs 8,000 crore on the basis of performance.

The government plans to infuse capital of Rs 76,000 crore by giving it space in budgetary allocation and through markets, and the rest Rs 1.35 lakh crore by issuing recapitalisation bonds.

Earlier in October, Union Finance Minister Arun Jaitley had announced an unprecedented PSU banks recapitalisation programme of Rs 2.11 lakh crore.

"To improve the lending capacity of the banks, we have announced the recapitalisation programme, which is essential to increase public spending on infrastructure, and that expenditure on infrastructure," Jaitley had said.

He had also maintained that there was a need to increase public investment for which bold steps will be taken by the government.