​​​
  1. Look at alternatives to govt infusions, RBI tells PSBs

Look at alternatives to govt infusions, RBI tells PSBs

Even as the government has so far infused only Rs 6,990 crore in nine public sector banks in FY15, banks who were been left out...

By: | Mumbai | Published: March 3, 2015 4:30 PM
rbi-l-pti

Even as the government has so far infused only Rs 6,990 crore in nine public sector banks in FY15, banks who were been left out have to become more profitable and try other routes of fund-raisng, RBI deputy governor R Gandhi said. PTI

Even as the government has so far infused only Rs 6,990 crore in nine public sector banks in FY15, banks who were been left out have to become more profitable and try other routes of fund-raisng, RBI deputy governor R Gandhi said on Tuesday.

Speaking to reporters on the sidelines of a Cibil conference, Gandhi said at present banks already have sufficient capital but going forward they have to take care of the strength of their balance sheet.

“This is one aspect of giving incentive to banks on the basis of their performance,” Gandhi added.

He said that a communication that has been sent to the banks by the government that they have to become profitable and efficient in order to get capital .

“They (banks left out) have to figure out the methods of raising capital, whether from the market or from any other methods. There is the element of balance sheet resizing or the reallocation of the risk assets in such a way that within the available capital they can still grow. They have have to find their own strategies for doing it,” he explained.

He said that to sent a send a strong message, the government has taken a decision to reward those banks which have better figures (return on equity and return on assets) adding that these banks have to pull up their socks they have to become profitable and reach the benchmark.

Earlier this month, the government had announced its plans to recapitalise nine public sector banks based on their last three years’ weighted average return on assets (RoA) and their return on equity (RoE).

Under the new criteria, only nine banks – State Bank of India (SBI), Bank of Baroda (BoB), Punjab National Bank (PNB), Canara Bank, Syndicate Bank, Allahabad Bank, Indian Bank, Dena Bank and Andhra Bank – were selected for a Rs 6,900 crore capital infusion in FY15. The chunk of it — Rs 2,970 crore was allocated to SBI — followed by BoB at Rs 1,260 crore and PNB at Rs 870 crore.

A Credit Suisse report issued on Saturday said that the government’s allocation (Rs 7,940 crore in FY16) is almost the same as their estimate of total dividend likely to be paid by all PSU banks to the government in FY16.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Go to Top