FinMin nod likely for capital infusion in PSU banks by mid-Nov | india | Hindustan Times
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FinMin nod likely for capital infusion in PSU banks by mid-Nov

india Updated: Oct 27, 2011 22:53 IST

The finance ministry today said it is likely to approve capital infusion into PSU banks, including State Bank of India (SBI), by mid-November. The capital requirement of PSU banks in the current fiscal has been estimated between Rs 10,000 and Rs 20,000 crore. "We will hopefully decide on the capital infusion for banks by Tuesday," Financial Services Secretary D K Mittal told reporters after the second meeting of the Committee on Capital Requirements of Financial Institutions.

Once this committee takes a decision, the proposal will go to finance minister Pranab Mukherjee for his approval, Mittal said, adding the process is likely to be completed by November 15. The first meeting of the panel headed by Finance Secretary R S Gujral was held last week. Capital infusion proposal after the approval from the Finance Minister will go to the Cabinet, he said.

About 5-6 banks, including SBI, Bank of Baroda, Syndicate Bank and Union Bank of India would require capital during the current fiscal, he said. The capital is either required to raise government holding to 58 per cent or tier I capital to 8 per cent. For current fiscal, he said, "the different scenarios for all public sector banks is between Rs 10,000 crore to Rs 20,000 crore." The Committee is examining proposals for capital requirement during the current fiscal as well as for long-term (2021).

By that time banks will have to meet Basel III norms as well. With India set to implement Basel III norms on capital adequacy, Mittal said the PSU banks would be requiring about Rs 3.5 lakh crore in the next 10 years. The Government has already earmarked Rs 6,000 crore towards capital infusion in the state-owned banks during 2011-12 and the additional amount would be sought through second batch of supplementary demands for grants to be tabled in the Winter Session of Parliament. The government during 2010-11 had provided capital support to the tune of Rs 20,157 crore to public sector banks. The lenders which got funds from the government last fiscal include Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce and UCO Bank.