Last month, Finance Minister Arun Jaitley had announced an unprecedented Rs 2.11 lakh crore two-year road map to strengthen public sector banks. The plan included recapitalisation bonds of Rs 1.35 lakh crore.
Currently, the government is in process of finalising the structure of bonds and decision could be made by the end of this month.
The finance minister had said there were multiple options before the government for recapitalisation bonds and they are being examined.
Once the structure is in the place, the government would front-load bond issuance. The preliminary assessment indicates it could be between Rs 70,000 crore and Rs 80,000 crore, sources privy to the development said.
However, nothing has been finalised yet, the official sources said, adding that the finance ministry would get better picture of requirements of various banks after the second quarter results are out.
NPAs of public sector banks alone have increased from Rs 2.75 lakh crore in March 2015 to Rs 7.33 lakh crore as on June 2017.
Besides recapitalisation bonds, the finance minister had announced that banks would get about Rs 18,000 crore under the Indradhanush plan over the next two years. Under Indradhanush road map announced in 2015, the government had announced to infuse Rs 70,000 crore in state- run banks over four years while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms, known as Basel-III.
In the last three-and-half years, the government has pumped in Rs 51,858 crore capital in the public sector banks.
Remaining Rs 18,142 crore would be pumped into banks over two years.