Amidst the rising interest rates in order to get more control over the growth of the economy, the Union Cabinet has recently approved a whopping sum of Rs 15,000 crore as the capital infusion in public sector banks (PSBs) in the current financial year (2010-11).

Notably, the announcement comes with an aim to increase the lending capacity of the PSBs by Rs 1.85 lakh crore. However, experts are of view that this announcement will also offer a helping hand as far as maintaining a minimum of eight per cent Tier-I capital to meet the credit requirement of the economy is concerned.

In fact, according to the discussion that eventually led to the earmarking of the Rs. 15,000, it is also decided that for 2011-12 the additional capital requirements, if any, will be calculated in consultation with the PSBs, based on their results in the third quarter of 2010-11.

It is believed that the move will primarily help the banking entities that have close to 51% stake of the Government and do not have an option of raising money from the market.