NEW DELHI: The government may infuse around Rs 40,000 crore into state-run lenders in 2019-20 as it looks to strengthen their balance sheets to enable them to step up lending An announcement to this effect is expected in the Budget on July 5.A senior government official told ET on condition of anonymity that a plan is being firmed up to help banks expand credit offtake further. “This capital will be used to support credit growth and help some weaker banks maintain regulatory norms,” the official said.Around five banks are still under the Reserve Bank of India’s prompt corrective action ( PCA ) framework, which imposes certain restrictions on lending operations.In 2018-19, the government had pumped in Rs 1.6 lakh crore, highest ever, into public sector banks, helping five lenders come out of the PCA framework. Some big banks such as Punjab National Bank and Union Bank of India have reported huge losses for the last quarter of the current fiscal.The interim budget presented in February did not provide any allocation for recapitalisation.“Almost all banks are well-provisioned at around 75% or more. Some big recoveries through the Insolvency Code are expected in the first quarter. This will only add to their profitability,” said the official. The government may decide to infuse the amount after the announcement of results for the first quarter in the current fiscal, he said.As per the latest data from RBI , credit growth increased 11.7% year-on-year in April, higher than 10.5% a year ago.“Some of this can be given as growth capital or in case there is a merger and it is needed to give that merged entity some cushion,” said the official.The government expects banks to push credit at a time when the Indian economy slowed down to a quarterly five-year low of 5.83% in the quarter to March.However, the government termed the decline in GDP growth in the last quarter of 2018-19 a “temporary slowdown”, blaming it on factors such as stress among non-banking finance companies which affected consumption finance. “The first quarter of the current fiscal will also see relatively slower growth. From the second quarter onwards, we expect growth and consumption to pick up,” economic affairs secretary Subhash Chandra Garg had said.The government will also push lenders to tap into markets. Around 10 banks have government holdings of more than 75%, which need to be brought down to be in line with the Securities Exchange Board of India’s norms.In a research note, Moody's Investors Service had said the government’s funding requirements of public sector banks will shrink substantially to Rs 20,000-25,000 crore in 2019-20 on improving asset quality.