Next tranche of bank recap bonds of Rs 28,000 crore likely to be issued by Friday

The next tranche of bank recapitalisation bonds worth Rs 28,000 crore is likely to be issued latest by Friday, sources told CNBC-TV18.

Around seven or eights banks are likely to be issued the recap bonds worth Rs 28,000 crore, the sources said.

On December 19, the government sought Parliament nod for Rs 41,000 crore additional recap bonds for them. The supplementary recap bond for Rs 41,000 crore is yet to get parliament nod.

Sources said that three banks —  Bank of India, OBC, Bank of Maharashtra — may exit from the prompt corrective action (PCA) framework post the approval for supplementary recap bond.

The total recap bonds for PSBs after the supplementary grant would stand at Rs 1.86 lakh crore. The amount was earlier Rs 1.45 lakh crore. Out of the Rs 1.45 lakh crore, Rs 80,000 crore was for financial year 2018, while Rs 65,000 crore was for FY19.

However, out of the Rs 65,000 crore for FY19, Rs 42,000 crore worth of recap bonds are yet to be given. In addition, the centre is seeking Rs 41,000 crore.

The government is yet to decide on the allocations of the fund or how much of the fund would be allocated to each bank.

Additional capital infusion is being done as the public sector banks (PSBs) have been unable to raise the required funds from the markets.