Since Government of India is the major stakeholder of Public Sector Banks (PSB), it's government's responsibility to infuse extra capital in order to overcome the difficulties faced by these PSBs. Infusion of additional capital by government to PSBs is the "Recapitalization".

Recapitalization is a type of corporate reorganization involving substantial change in a company's capital structure. The Government is committed to keep all the PSBs financially sound and healthy so as to ensure that the growing credit needs of our economy are adequately met. To meet the credit requirement of the economy, banks would require capital funds commensurate to the increase in their Risk Weighted Assets (RWAs).