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Government Gives Nod to Rs. 1.35 Lakh Crores from Recapitalization Bonds

October 27, 2017

Government Gives Nod to Rs. 1.35 Lakh Crores from Recapitalization Bonds

In one of the biggest announcements of the year, Finance Minister Arun Jaitley on Tuesday said that out of the total approved amount of Rs. 2.11 lakh crores, Rs. 1.35 lakh crores have been approved by the cabinet from the recapitalization bonds for the struggling banking sector. The remaining amount, i.e. Rs. 76,000 crores will be obtained from the market and the budgetary allocations.

Recapitalization bonds are used as a payment for the shares bought by the government to ailing banks so as to help raise capital. In laymen terms, to help the banks raise capital the government itself borrows from them through the recap bonds.

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