What recapitalisation?

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SummaryThe government seems to be taking away with one hand, what it gives with the other.

The government seems to be taking away with one hand, what it gives with the other. While it recently capitalised state-owned lenders — an amount of R6,550 crore was infused into a clutch of 13 banks — these banks will now collectively give back to the government a sum of R1,367 crore by way of interim dividends, reports Devangi Gandhi in Mumbai. In other words, the government stands to get back about a fifth of what it gave. Indeed, some of the smaller banks are likely to return as much as half of the infused capital. Last October, the government announced R14,000 crore of capital infusion in 20 PSU banks through preferential allotment of equity to help them shore up capital adequacy. But with the PSU disinvestment not bringing in as much as was budgeted, the government is now pocketing dividends.

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