New Delhi: The government on Friday announced Rs 55,250 crore upfront capital infusion in PSU banks for credit growth and regulatory compliance to support the merging lenders.

The declaration came after the government announced the mega-merger of 10 PSU banks into four entities, where the Punjab National Bank (PNB), the Oriental Bank of Commerce and the United Bank will merge to become the second-largest public sector bank (PSB) while the Canara Bank and the Syndicate Bank will amalgamate to set up the fourth-largest PSU banking entity.

According to Finance Minister Nirmala Sitharaman, Punjab National Bank will get Rs 16,000 crore, Union Bank Rs 11,700 crore, Canara Bank Rs 6,500 crore, Indian Overseas Bank Rs 3,800 crore, Central Bank of India Rs 3,300 crore, Bank of Baroda Rs 7,000 crore, Indian Bank Rs 2,500 crore, UCO Bank Rs 2,100 crore, Punjab & Sind Bank Rs 750 crore and United Bank of India Rs 1,600 crore as part of the capital infusion plan.

Bank of Baroda is the only bank outside Friday’s merger announcement which will get the capital infusion.

The Finance Ministry had infused Rs 1.06 lakh crore as bank recapitalization during the previous financial year as against the budgeted target of Rs 65,000 crore.

Sitharaman also said that loan recovery of PSU banks was at record levels as Rs 1.21 lakh crore was recovered by the banking system.

“Rs 55,250 crore upfront capital infusion will be made in PSU banks for credit growth and regulatory compliance to support the economy. We have to bolster equity infusion into the banks with a complete good governance footing,” she said.

The Finance Minister said that for Non-Banking Financial Companies (NBFCs), a partial guarantee scheme has already been executed and four NBFCs have already found liquidity solution via PSBs in the last one week.

She said the sanction has begun with Rs 3,300 crore and Rs 30,000 crore more were in the pipeline.

The Finance Minister also said that eight PSBs have launched repo-linked home/vehicle/mortgage/cash-credit loans.