Govt to seek Parliament approval for bank recap plan next week

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The government will seek the approval of the Parliament next week for its plan to recapitalise public sector banks (PSBs), sources have told CNBC TV18.

It is also likely that the government will provide an additional Rs 10,000 crore as capital for PSBs through a second supplementary.

The second supplementary may come sometime around the end of next week, according to the sources mentioned above. Parliament will then set a date on which the first tranche of recapitalisation bonds will be issued.

Of the total amount of capital infusion in PSBs approved in this year’s Union Budget, Rs 8,000 crore is yet to be passed on to the banks. Since this amount has already been approved and budgeted the government would not need any more approvals for the same.

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However, the additional recapitalisation of Rs 10,000 crore that the government is planning to infuse through a second supplementary is yet to be approved by Parliament because it is a part of the government’s Indradhanush commitments due next year. If approved, this payment will be made before the end of March 2018.

In addition to this, the first tranche of recapitalisation bonds, which are a part of the government’s Rs 2.1 lakh crore recapitalisation package for PSBs, is likely to come out soon and sources said that the date and size of the issue may be announced in the second supplementary.

The specifics of the bond issue, like its tenure and who will be allowed to subscribe to it, will be announced later.