Govt to infuse Rs 2 lakh cr into banks by 2020

Source :BS:PTI:New Delhi:12:15 ist


The government plans a whopping Rs 2 lakh crore capital infusion into the state-owned banks spread over 10 years, to help them meet fund requirement and comply with the Basel-III capital adequacy norms.


"[Capital infusion is] estimated at Rs 2 lakh crore by 2020 in public sector banks," D K Mittal, Secretary Department of Financial Services told PTI.



The government, sources said, will be looking at various instruments to pump more capital into the state-owned banks.



"One of the instruments being looked into is non-voting shares," an official said, adding the efforts would help the banks to meet Basel III requirements.


Non-voting shareholders get better returns than normal shareholders on their investment but have no voting rights.


Implementation of the Basel III norms is scheduled to commence from January 1, 2013, and has to be completed by January 1, 2019.

The official further said the Government would like to keep a buffer in its shareholding of banks at around 58% as it would provide it "enough legroom" to maintain a controlling stake even it does not participate in the capital raising exercise by any bank.

The government is required to keep a minimum of 51% equity in public sector banks.

Basel III is the new international regulatory framework designed to correct the deficiencies in regulation that led to the global financial crisis of 2008. It seeks higher capital adequacy ratio to meet any financial exigency.

The RBI is examining the Basel III regulations and would issue guidelines to the extent applicable for banks operating in India in due course of time.

There are 26 public sector banks, including SBI and its subsidiaries.

National Housing Bank to seek nod for raising funds thru ECBs

Mr R.V. Verma

Source : BL:K.R. SRIVATS:NEW DELHI, SEPT. 30: 2011

National Housing Bank (NHB) wants to be the housing sector's window for external commercial borrowings (ECBs). It wants to pass on benefits of ECBs, including low cost, to the housing-finance sector without transferring any risks.

Towards this end, NHB will soon approach the Finance Ministry and the Reserve Bank of India (RBI) to allow it to raise ECBs, Mr R.V. Verma, Chairman and Managing Director, NHB, toldBusiness Line in an interview here.

Currently, ECBs are not permitted for the housing sector. NHB, too, cannot raise funds through ECBs, but is allowed foreign-currency borrowing from multilateral bodies after obtaining approvals of the Government and the RBI.

“We are not doing external commercial borrowings now. That is what we should be allowed to do. We should have an option to raise money in the external market. Because…there are certain benefits in the international markets.

We should be allowed to tap the international market and transfer the benefits to the domestic housing-finance system. All the risks will be hedged at our level and rupee funds will be passed on to the housing-finance companies (HFCs),” he said.

Mr Verma made it clear that NHB was only looking to transfer benefits of ECBs and not associated risks. He also said NHB was keen to raise funds through ECBs only for HFCs and not for commercial banks.

The NHB chief saw merit in allowing the local housing-finance system to raise ECBs, especially when 100 per cent foreign equity is allowed in such companies.

FUND RAISING

On fund raising from multilateral institutions, Mr Verma said NHB is talking to the World Bank for $350 million loan assistance from its International Development Association to help low-income households by way of credit to HFCs on the condition that it is used only to build houses. This loan assistance will help NHB improve its asset-liability management, he said.

“Our borrowings in India is mostly not very long. Long-term funds are not available while we are expected to lend long. Low- and moderate-income housing require long-term funding. The funds that we expect from World Bank are long-term and, therefore, we can also do more long-term funding for low- and moderate-income housing,” Mr Verma said.

Ajai Kumar assumes charge as Corporation Bank CMD

Source : BL:Mangalore:1st oct 2011


Mr Ajai Kumar, who has been appointed as Chairman and Managing Director of Corporation Bank, assumed office on Saturday. 


Before his appointment as Chairman and Managing Director of Corporation Bank, Mr Kumar was Executive Director of UCO Bank since 2009. 


A bank release said here that Mr Kumar started his career with Bank of Baroda as an officer in 1973.


 In his 36 years of service in Bank of Baroda, he had held various positions handling key responsibilities in head office, zonal offices, branches, New York office and offshore banking operations of Nassau, Bahamas.