India may need to pump $20 billion into coronavirus-hit state banks: Report

India may need to inject up to 1.5 trillion rupees ($19.81 billion) into its state-owned lenders as their pile of soured assets is expected to double during the coronavirus pandemic, three government and banking sources told Reuters.

The government initially considered a budget of around 250 billion rupees for bank recapitalisations but that has risen significantly, a senior government source with direct knowledge of the matter said, with loan defaults likely to rise as businesses take a severe hit from nationwide lockdowns to tackle the coronavirus.

“The situation is very grim,” the source said, adding that banks would require fresh funds soon.

All the sources asked not to be identified as the discussions are private. India’s finance ministry did not respond to a request for comment during working hours on Wednesday.