The ministry would not cut its capital infusion plan even as the Reserve Bank of India (RBI) has extended the deadline for meeting the Basel III norms by a year.
The Finance Ministry is likely to infuse Rs 54,000 crore in public sector banks (PSBs) soon as part of its ambitious recapitalisation plan to improve the financial health of lenders. Last October, the government had announced Rs 2.11 lakh crore bank recapitalisation plan, of which Rs 1.35 lakh crore was capital infusion from the government while the rest was through recap bonds and market raising.
The ministry would not cut its capital infusion plan even as the Reserve Bank of India (RBI) has extended the deadline for meeting the Basel III norms by a year, news agency PTI reported. As the deadline has been pushed, the capital requirement of banks is likely to come down to around Rs 15,000-20,000 crore, PTI reported quoting anonymous sources.
After assessing the requirement of each bank, the ministry is expected to finalise the capital infusion of about Rs 54,000 crore by this month-end or by early next month, the news agency said.
However, the Finance Ministry is unlikely to reduce the amount of capital infusion and may approve the plan of Rs 54,000 crore infusion by month-end or early next month. The government will recapitalise banks on the basis of regulatory capital requirement but will also give capital to some banks for fueling growth.
After a long stand-off with the government, the RBI on November 19 decided to extend the deadline for meeting the Basel III norms to March 2020 from March 2019. Under RBI-mandated norms, banks are supposed to maintain the capital adequacy ratio of 9%. Rating agency Crisil said that the relaxation of the deadline will increase the lending capacity of banks by Rs 35,000 crore.