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Govt to infuse Rs 7,940 cr in PSU Banks in FY'16

February 28, 2015 16:58 IST

Finance Minister Arun Jaitley on Saturday proposed to infuse Rs 7,940 crore funds next fiscal in the public sector banks to enable them maintain adequate capital.

"The provision is for recapitalisation of public sector banks to enable them to maintian their Tier-I capital at comfortable level," Jaitley said in his maiden full-year Budget presentation. Budget 2015: Complete Coverage

"In order to raise funds, banks have been allowed to reduce government stake to 52 per cent," Jaitley reiterated today in the post Budget interaction.

For the current fiscal, the government had proposed capital infusion of Rs 11,200 crore. However, against that the government disbursed Rs 6,990 crore to 9 public sectors banks including SBI, BOB, PNB, Canara Bank and Indian Bank based on their performance. Largest public sector lender SBI leads the pack with a capitalisation of Rs 2,970 crore, followed by BoB Rs 1,260 crore, PNB Rs 870 crore and Canara Bank Rs 570 crore. Public sector banks require Rs 2.40 lakh crore capital by 2018 to meet global Basel III norms.

"To be in line with the Basel III norms, there is requirement to infuse Rs 2.40 lakh crore as equity by 2018 in our banks (public sector banks). To meet this huge capital requirement, we need to raise additional resources to fill this obligation," Jaitley had said in his last year's Budget presentation. Budget 2015: Complete Coverage

A large part of this fund would be raised through public offers made to retail customers, he had said.

While preserving the public ownership, the capital of these banks will be raised by increasing the shareholding of the people in a phased manner through the sale of shares largely through retail to common citizens of this country, Jaitley had further said.

The government has infused Rs 58,600 crore between 2011 to 2014 in the state-owned banks.

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