Govt may infuse Rs 20,000 cr capital in PSU banks in FY'14

Reuters  |  New Delhi  February 13, 2013 Last Updated at 19:51 IST


Government banks have submitted a capital requirement plan to FinMin

The government is likely to infuse additional capital of Rs 20,000 crore in the public sector banks next financial year to meet Basel III global capital risk norms.

As per the capital requirement plan submitted to the Finance Ministry, public sector banks would require about Rs 20,000 crore in 2013-14, official sources said.

"The final amount may be less which will be decided in consultation with the Department of Expenditure under the finance ministry," sources added. The announcement of capital infusion will be made by Finance Minister P Chidambaram in the Budget on February 28.

Last month, Chidambaram had said capital can only be provided by shareholders.     The government is the majority shareholder in banks and would like to maintain its control and majority shareholding in them, he had said, adding, the government is committed to keep all the state-owned banks financially sound and healthy so as to ensure that the growing credit needs of the economy are adequately met.

Implementation of Basel III capital regulations envisaged to enhance requirement of core equity capital by banks due to higher capital ratios. The Basel III capital ratios will be fully phased in as on March 31, 2018.

Meanwhile, the RBI has extended the implementation date for Basel III by three months to April, 1, 2013. During the current, the government has approved infusion of Rs 12,517 crore in around 10 state-owned banks.

The government infused about Rs 20,117 crore in public sector banks during 2010-11, and Rs 12,000 crore in 2011-12. As per the Reserve Bank of India (RBI) estimate, the government will have to pump in additional Rs 90,000 crore to retain its shareholding in the Public Sector Banks (PSBs) at the existing level to meet the the Basel III norms over the next five years.   
"... If the Government opts to maintain its shareholding at the current level, the burden of recapitalisation (in PSBs) will be of the order of Rs 900 billion," RBI Governor D Subbarao had said last year.

He had said the government has two options-either to maintain its shareholding at the current level or bring down its shareholding at 51%. However, he had said that if the government decides to reduce its shareholding in every bank to a minimum of 51%, the burden reduces to under Rs 70,000 crore.

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PSU Banks in spotlight as FinMin plans to ask Rs 14000 crore for recapitalization

 
source :Bloombrg UTV.:Wednesday, 2 November 2011, at 09:55 IST

The finance ministry is likely to ask for an additional Rs 14,000 crore in the second supplementary demand to fund the recapitalization programme of PSU banks in fiscal year 2012. 

Out of the total amount, Rs 4,500-7,000 crore will be allocated for capital infusion in State Bank of India (SBI) and the rest for other public sector banks.

The finance secretary-led committee, which is looking into bank recapitalization, will submit its report in a week's time. 

Recently, a clutch of PSU banks posted their second quarterly earnings for the fiscal year 2012. Here’s a look at how they performed:

Central Bank: Unable to meet street expectations, Net profit was down 36% and provisions for bad loans up 80%. The non-performing assets (NPAs) stood at 2.94% versus 2.29% in the corresponding period of last year.

Union Bank: Disappointment due to high provisioning. Provisions rose 4% against expectations of decline. All the same, the NPAs jumped to 2.04% versus 1.18%.

Punjab National Bank (PNB): Managed to keep NPAs under control. Gross NPAs were flat at 2% versus 1.9% (YoY).

Bank of Baroda: Gross NPAs were flat at 0.47% as against 0.38% (YoY).

Govt to infuse Rs 15,000 cr in PSU banks in 2010-11

Source:BS Reporters / New Delhi April 24, 2010, 1:03 IST The Union Cabinet today approved Rs 15,000-crore capital infusion in public sector banks (PSBs) in the current financial year (2010-11). The initiative will increase the lending capacity of the PSBs by Rs 1.85 lakh crore. The move is also likely to help the banks maintain a minimum of eight per cent Tier-I capital to meet the credit requirement of the economy. The amount of Rs 15,000 crore is to be infused in Tier- I Capital instruments of the PSBs. The exact amount, mode of capitalisation and other terms and conditions would be decided in consultation with the banks at the time of infusion.  For 2011-12, additional capital requirements, if any, will be worked out in consultation with the PSBs, based on their results in the third quarter of 2010-11. Capital infusion will also help the banks, which are close to the requirement of a minimum 51 per cent government ownership and do not have the option to raise funds from the capital markets. Injecting more capital would increase government holding in such banks, thereby providing them more headroom to raise capital by diluting stake in the future. Oriental Bank of Commerce, Dena Bank, Andhra Bank, Bank of Baroda, IDBI Bank and Vijaya Bank have less than 55 per cent government equity.