R15,000-crore fund infusion plan for PSBs to be finalised this week
“This week, we will have the numbers out about the allocation (of capital to various banks),” financial services secretary DK Mittal told reporters. He said major banks that require capital included Indian Overseas Bank, Central Bank of India and Dena Bank. Bank of Maharashtra and SBI will get additional capital.
Mittal said rights issues were also being considered for recapitalisation of banks, adding, however, that it was a call that each bank had to make. Asked if the finance ministry was in favour of rights issue for all banks, he said it had to be initially cleared by the respective boards of the banks and “when they approach us, we will take a decision.”
On whether LIC will be asked to subscribe to the rights issue, he said: “If there is a rights issue, there is scope for anybody to go in. LIC is not a short-term investor. Maybe, LIC will also make money by selling some of the equities when they come to the market.”
All banks, barring Dena Bank, have Tier-I capital of over 8% — which is well above the Basel norms. However, the finance ministry will infuse additional capital to ensure that credit expansion takes place. On the proposed holding company structure for recapitalisation of public sector banks, Mittal said the finance ministry is analysing
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