Public sector banks, including the State Bank of India, are facing mounting NPAs or defaults as big debtors, such as corporations, refuse to, or are unable to make payments.
The taxpayer money invested by the government helps the banks write off these loans.
By a letter dated 19 August, the government of India has informed the bank that it will invest Rs 857 cr by way of preferential issue of shares. A meeting of shareholders has been called on 22 Sept for approving the investment.
Other banks are also expected to receive funding.