Rs. 8,000-crore fillip for public banks to help them maintain capital | business | Hindustan Times
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Rs. 8,000-crore fillip for public banks to help them maintain capital

Finance minister Arun Jaitley, in his Budget speech on Saturday, proposed to infuse Rs. 7,940 crore into the public sector banks in 2015-16 to help them maintain adequate capital.

business Updated: Feb 28, 2015 22:56 IST
HT Correspondent

Finance minister Arun Jaitley, in his Budget speech on Saturday, proposed to infuse Rs. 7,940 crore into the public sector banks in 2015-16 to help them maintain adequate capital.

“The provision is for recapitalisation of public sector banks to enable them maintain Tier-I capital at comfortable level,” Jaitley said.

The government had proposed a capital infusion of Rs. 11,200 crore for 2014-15. However, the government disbursed only Rs. 6,990 crore to only nine state-owned banks, including the State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank and Indian Bank, based on their performance.

Besides, the finance ministry has also directed banks to prepare a roadmap to bring down the government stake to about 52% to raise additional resources to meet the stringent Basel III guidelines.

“In order to raise funds, banks have been allowed to reduce government stake to 52%,” Jaitley said after presenting the budget.

Public sector banks require Rs. 2.40 lakh crore capital by 2018 to meet global norms.

“Recapitalisation exercise is one of the options available with banks to boost capital adequacy — a measure of the banks’ finances and reserves…there are several other options and the proposed autonomous board would look into the issue,” TM Bhasin, chairman, Indian Banks’ Association, told HT.