The finance ministry yesterday approved capital infusion of Rs 11,336 crore in five PSU bank including PNB, Corporation Bank and Andhra Bank to help them meet regulatory capital requirement, PTI reported government sources as saying. Notably, this is the first ever capital infusion in the current fiscal and the remaining amount of Rs 53,664 crore would be allocated later, as the year progresses. The current infusion of Rs 11,336 crore is a part of remaining Rs 65,000 crore out of Rs 2.11 lakh crore capital infusion over the coming two fiscal years.
Earlier, the government had announced a Rs 2.11 lakh crore PSU bank recapitalisation programme in October-17. As per the plan, the public sector banks (PSBs) were slated to receive Rs 1.35 lakh crore through re-capitalisation bonds, and the balance Rs 58,000 crore through raising of capital from the market. We take a closer look at which bank gets how much according to the latest plan.
India’s second largest lender PNB, hit by an over $2-billion fraud allegedly perpetrated by Nirav Modi and Mehul Choksi, will be provided Rs 2,816 crore. The next in the list is Corporation Bank, slated to receive Rs 2,555 crore, a government source told The Financial Express. The next is the list is Indian Overseas Bank, which will receive a total of Rs 2,157 crore. Andhra Bank and Allahabad Bank will receive Rs 2,019 crore and Rs 1,790 crore respectively.
Some of the above-mentioned banks had asked for immediate capital infusion, even as they are face increased pressure due to rising interest payments on account of their Additional Tier 1 (AT-1) bonds. Consequently, they were facing the risk of breaching the regulatory capital requirement.
Capital is very much required for the state-run PSU lenders even as they are saddled with non-performing assets (NPAs) or bad loans of about Rs 10 lakh crore. Out of 21 public sector banks, 13 have already taken the approval of their boards or shareholders for raising capital through the equity market, PTI reported. The combined value of the shares sales of these banks is upwards of Rs 50,000 crore.