By IANS
New Delhi : The 27 financially-stressed regional rural banks, whose net worth has turned negative, will now get funds from the central government to induct fresh capital and revive their operations, it was announced Wednesday.
In a decision taken by the union cabinet, the central government will contribute 50 percent towards fresh capital of these banks, estimated at Rs.8.97 billion ($228 million). The re-capitalisation needed by the banks is assessed at Rs.17.95 billion.
“Re-capitalisation would improve the viability of regional rural banks having negative net-worth,” an official statement said after a meeting of the cabinet, presided over by Prime Minister Manmohan Singh.
“The amount will be released to regional rural banks along with the contribution by the state government and the respective sponsor bank,” the statement added.
The government is also expected to come out with a package on cooperative credit in mid-March, following a draft package that was circulated by Finance Minister P. Chidambaram to state finance ministers Tuesday.