For the first time since 2008, the government will not add any capital to public sector banks in FY 23

Ahmedabad: Central government will not infuse any capital in public sector banks in financial year 2023. According to media reports, for the first time since the financial year 2008, the government will not capitalize PSBs.

According to the report, due to the significant positive profitability of government banks in 2022, the government will not need to infuse more capital this year and on the other hand, the bad loan ratio is continuously improving. Apart from this, currently no government-owned bank is included under Prompt Corrective Action (PCA).

The central government did not earmark any funds for recapitalization of public sector banks in Budget 2022. However, the money can be allocated by approving supplementary demands, the report added.

The government has recapitalized government banks between the financial year 2016 and 2021 by Rs. 3.3 lakh crore was allocated. This funding addition has helped banks improve their balance sheets and capital-to-risk-weighted assets ratio (CRAR). As against the requirement of 10.87 per cent, the CRAR of PSBs was 14.6 per cent as on March 2022.

Bad loans fell to a six-year low of 7.6 percent in March 2022 and non-food credit growth was 16 percent in August. In August 2021, this was 6.7 percent. Banks in the first quarter of the current year Rs. 15,306 crore in profit, showing a growth of over 9 percent.