The government on Friday said Rs 20,088 crore of capital would be infused in 13 public sector banks (PSBs) in a month, as part of its four-year (FY16-FY19) plan to enable PSBs to create a safe buffer to meet Basel-III norms and to grow their businesses. The amount would be released in two tranches.
SBI, the country’s largest lender, would get R5,531 crore. Other top recipients include Bank of India (R2,455 crore), IDBI (R2,229 crore), IOB (R2,009 crore), Bank of Baroda (R1,786 crore) and PNB (R1,732 crore).
The government would provide another R5,000 crore to PSBs, mostly to the eight banks who won’t get any funds in the initial tranches, in the third tranche in the fourth quarter of FY16. In the third tranche, the allocations would be mainly based on performance on various parameters such as efficiency of capital use, business growth and NPA management, while financial services secretary Hashmukh Adhia said performance, apart from need, was a yardstick in some cases of the first two tranches as well.
The government would infuse a total of R25,000 crore in PSBs including R7,940 crore provided initially in the budget for the current fiscal year.
Based on a credit growth scenario of 12-15%, the government has estimated the PSBs capital requirement at R1.80 lakh crore in FY16-FY19, out of which R70,000 crore would be from the Centre’s budget. The government expects banks would be able to raise the remaining R1.10 lakh crore from market as reforms initiated in PSBs would improve their valuations and attractiveness to investors.
According to the four-year roadmap for capitalisation of PSBs, the government would infuse R25,000 crore each in in FY16 and FY17 while R10,000 crore each would be provided in FY18 and FY19.