NEW DELHI, Feb 11: India’s government announced on Wednesday plans to inject nearly $800 million into three state-run banks to spur lending and give a boost to the country’s slowing economy.

The government will pump a total of Rs38 billion ($779 million) into UCO Bank, the Central Bank of India and Vijaya Bank, Finance Minister Palaniappan Chidambaram announced.

The injection is aimed at enabling banks to support “the credit requirement of the productive sectors of the economy,” the government said in a statement.

Fearful of loan defaults, banks have become increasingly hesitant about extending credit to consumers and businesses, and the government has been pushing state-run financial institutions to allow easier credit.

“This will help banks raise capital adequacy over 12 per cent, much above the Basel II norms of nine per cent,” Chidambaram said.

The Basel II agreement aims to ensure that banks globally meet similar conditions for matching reserves to risks.

The government is injecting 12 billion rupees into UCO Bank, 14 billion rupees into the Central Bank of India and 12 billion rupees into Vijaya Bank over a two-year period.—AFP