Government to inject Rs 20,000 crore in PSBs in a month, SBI to get Rs 5,000 crore

Government will infuse Rs 20,088 crore into 13 PSU banks within a month’s time with country’s largest lender SBI cornering a hefty Rs 5,531 crore, Finance Ministry said today.

Under the allocation plan, Bank of India will get Rs 2,455 crore, IDBI (Rs 2,229 crore), Indian Overseas Bank (Rs 2,009 crore), Bank of Baroda (Rs 1,786 crore), PNB (1,732 crore), Union Bank of India (Rs 1,080 crore), Canara Bank (Rs 947 crore) and Corporation Bank (Rs 857 crore).

Moreover, Dena Bank will get Rs 407 crore, Bank of Maharashtra (Rs 394 crore), Andhra Bank (Rs 378 crore) and Allahabad Bank (Rs 283 crore).

Financial Services Secretary Hasmukh Adhia while making a presentation titled Indradhanush — Plan for Revamp of Public Sector Banks said “the capital infusion will happen within a month”.

The government has already laid out a roadmap for Rs 70,000 crore capital infusion in PSU banks over a period of four years. Of this Rs 25,000 crore each will happen in 2015-16 and 2016-17 and Rs 10,000 crore each in 2017-18 and 2018-19.

Of the Rs 25,000 crore allocated this fiscal, the distribution of Rs 5,000 crore among eight banks would be decided in the fourth quarter after looking at the performance of various banks in the first nine months.

“Eight banks, which did not get any capital in first two tranche will get preference in third tranche,” Adhia said.

The government has estimated capital requirement of PSU banks over four year period at Rs 1.80 lakh crore. Of this, banks would have to raise Rs 1.10 lakh crore from the market.

Adhia said this estimate is based on credit growth rate of 12 per cent for the current year, and 12-15 per cent for next three years depending on the size of the bank.

The Financial Services Secretary said that it is presumed that the emphasis on PSBs financing will reduce over the years by developing a vibrant corporate debt market and greater participation of private sector banks.

“As of now the PSBs are adequately capitalised and meeting the Basel III and RBI norms. However, the Government wants to adequately capitalise all the banks to keep a safe buffer over and above the minimum norms of Basel III,” Adhia said.

Source: ET

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