India seeks $3.2 bn from WB to recapitalise banks

The Govt has sought a $3.2 bn loan from the World Bank to infuse capital into PSU banks.

The Government has sought a USD 3.2 billion loan from the World Bank to infuse capital into public sector banks,the Lok Sabha was informed.

Minister of State for Finance Namo Narain Meena responded in the affirmative,in a written reply to the Lok Sabha to a query on whether loans from the multilateral lending agency contain a proposed USD 3.2-billion for recapitalising state-run banks.

“To enable the PSBs to meet credit requirements of the economy while maintaining a healthy and comfortable level of regulatory capital to risk-weighted assets ratio,a proposal has been sent to the World Bank,” he said.

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However,on whether the Government proposes to borrow funds from the World Bank to prop up the banking system,he said,”The assessment of the Indian financial system during 2007-08 done by the Reserve Bank of India shows that the banking sector in India continues to be healthy,sound and resilient.”

Meena further said that India is taking loans from the International Bank for Reconstruction and Development (IBRD) and credit (soft loan) from the International Development Association (IDA).

“The cumulative commitment of the World Bank (IBRD and IDA) loans to India till June 2009 is USD 73.93 billion (IBRD USD 37.68 billion and IDA USD 36.25 billion),” he said.