‘Final plan for capital infusion in public banks this week’

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SummaryAll but Dena Bank has tier I capital of above 8 per cent, well above Basel norms.

The finance ministry is expected to take a crucial decision on infusing Rs 15,000 crore capital in public sector banks this week. “This week there will be some announcement about the allocation (to various banks),” financial services secretary DK Mittal said on Monday.

Indian Overseas Bank, Central Bank of India and the Bank of Maharashtra are the top three banks which require capital, Mittal said, adding that State Bank of India would also need capital.

All but Dena Bank has tier I capital of above 8 per cent, well above Basel norms. While Indian Overseas Bank requires Rs 1,500 crore of capital infusion, Bank of Maharashtra has sought Rs 800 crore from the finance ministry.

“Allocation of the funding will be decided and rest, I think the process still has to go through,” Mittal said, adding that boards of each of the bank would have to decide whether they want to infuse capital through a rights issue.

The finance ministry had pumped in Rs 12,000 crore in public sector banks to maintain their capital adequacy ratio in 2011-12, while it gave Rs 20,157 crore in 2010-11.

The RBI is also broadly on board to a proposal for a financial holding company to raise resources for re- capitalisation of banks.

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