The Centre announced a .Rs 2.1-lakh-crore capital infusion plan for state-owned banks and an ambitious road development programme to boost the economy, which it said was "poised for takeoff" after short-term disruption caused by structural reforms.
Banks burdened by bad loans will get .Rs 1.35 lakh crore from bonds, .Rs 18,000 crore from the Budget and raise the remaining.Rs 58,000 crore through share sales. Fitch Ratings estimates India's banks will need nearly $65 billion in bank capital by March 2019.
The capital infusion announced by the government amounts to about half that. ET had first reported on the capitalisation bonds plan on September 13.
The capital infusion programme that seeks to clean up banks' books and get them to lend more, will run over the current fiscal and the next and will be bolstered with further reforms to make lenders more accountable.