India plans extra funds for state banks

摘要

India is preparing to pump in a higher than expected capital sum into poorly performing state banks, according to government sources. The move could see New Delhi infuse as much as US$34bn additionally and make it harder to hit planned deficit targets. Prime Minister Narendra Modi's government pledged in August to put Rs700bn (US$10.2bn) into state-run banks through four years to March 2019 as part of a broader banking reform programme. It had then said the lenders would raise another Rs1.1trn from the financial markets. However, a surge in provisions for bad loans in a central bank-directed balance-sheet clean-up exercise has sent several lenders into losses, hammering their stock prices and limiting their ability to secure external funding as the economy wobbles. It also means Finance Minister Arun Jaitley will have to squeeze the national budget to foot the bill.