The government is likely to infuse Rs 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds by the end of this month, sources said Thursday. The amount infused will help the banks meet regulatory capital requirement, and its disbursement might take place before December 31, sources said. Out of these seven PSBs, Bank of India is likely to get the highest amount of Rs 10,086 crore, followed by Oriental Bank of Commerce, which might get Rs 5,500 crore through recapitalisation bonds, sources added.
Other banks that are likely to receive capital infusion in this round included Bank of Maharashtra which may get Rs 4,498 crore, UCO Bank (Rs 3,056 crore) and United Bank of India (Rs 2,159 crore). The government had earlier announced an infusion of Rs 65,000 crore in PSBs in 2018-19, of which Rs 23,000 crore has already been disbursed, while Rs 42,000 crore is remaining.
Earlier this month, Finance Minister Arun Jaitley said the government would put an additional Rs 41,000 crore in PSBs over and above what was announced earlier. On December 20, the government sought Parliament’s approval for infusion of an additional Rs 41,000 crore.
The recapitalisation, the finance minister said, would enhance the lending capacity of PSBs and help them come out of the Reserve Bank of India’s Prompt Corrective Action (PCA) framework. Eleven out of the total 21 PSBs are under the RBI’s PCA framework, which imposes lending restrictions on weak banks. These are Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra.