Bank funding for bad loans expected to worsen India deficit

Mumbai

INDIA is preparing to pump in a higher-than-anticipated capital sum into poorly performing state banks, government sources said, a move that could see New Delhi infuse as much as US$34 billion additionally and make it harder to hit planned deficit targets.

Prime Minister Narendra Modi's government in August pledged to put in 700 billion rupees (S$14.4 billion) into state-run banks through four years to March 2019 as part of a broader banking reforms programme. It had then said the lenders would raise another 1.1 trillion rupees from the financial markets.