To fulfil the capital requirements under Basel III, the government will have to infuse up to Rs90,000 crore into state-owned banks by March 2018, RBI governor D Subbarao said on Tuesday. The capital infusion will keep the government’s shareholding at current levels, he said.

“Providing equity of this size will be a significant challenge given the fiscal constraints of the government,” Subbarao said.

However, if the government decides to reduce its shareholding in public sector banks to 51%, capital infusion could come down to Rs70,000 crore, he said. Indian banks in general would require up to Rs5 lakh crore worth of capital by March 2018 to abide by Basel III norms, he added.

Meanwhile, RBI deputy governor K C Chakrabarty said the central bank is not in favour of revisiting the priority sector lending norms put out in July. Defending the decision to exclude infrastructure lending from priority sector classification, he said banks were already lending towards infrastructure. “If infrastructure companies are non-priority sector, they will get credit cheaper and faster.”