The finance ministry is expected to infuse Rs 40,000 crore in state-owned banks in order to increase the bank's lending capacity and strengthen their balance sheet, The Economic Times reported citing a senior government official.

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The announcement may happen during the 2019 Budget presentation on July 5, the report said, adding that the ministry may decide to pump cash after the announcement of first-quarter earnings of the current fiscal.

“This capital will be used to support credit growth and help some weaker banks maintain regulatory norms,” the government official told ET, requesting anonymity.

Around five banks are still under the prompt corrective action (PCA) framework of the Reserve Bank of India (RBI), which imposes certain restrictions on the lending.

The government had infused Rs 1.6 lakh crore, its highest ever recapitalisation drive into public sector bank in 2018-19 and had helped five lenders come out of the PCA framework, the report added. As per the Reserve Bank, the credit growth increased 11.7 percent on a yearly basis in April, higher than 10.5 percent last year.