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Finance Ministry To Finalise Capital Infusion Of Rs 8,000 Crore Within 15 Days

This is part of the Centre’s second and final tranche of capital infusion for fiscal 2015-16.



Customers use a Union Bank of India automated teller machine (ATM), left, as security guards talk in front of a Bank of Baroda ATM (Photographer: Adeel Halim/Bloomberg)
Customers use a Union Bank of India automated teller machine (ATM), left, as security guards talk in front of a Bank of Baroda ATM (Photographer: Adeel Halim/Bloomberg)

The finance ministry is giving final touches to infusing around Rs 8,000 crore in public sector banks (PSBs) as part of its second and final tranche for the current fiscal, 2015-16.

The second round of capital infusion is almost ready and in the next few days it should go to Finance Minister Arun Jaitley for approval, people with direct knowledge of the matter said.

The entire process should be over within a fortnight and then the respective bank would start receiving funds, they added.

The second round of funding would be based on the strict parameters, sources said, adding that few banks would be eligible, and include those whose common equity Tier 1 (CET1) capital is lower than 8 percent.

Some of the banks eligible for fund infusion include IDBI Bank, Indian Overseas Bank and UCO Bank where CET1 has been less than 8 percent at the end of the third quarter of the current fiscal.

The government has already announced fund infusion of Rs 22,915 crore, out of the Rs 25,000 crore earmarked for 13 PSBs for the current fiscal. Of this, 75 percent has already been released to them.

The first tranche was announced in July with the objective of enhancing their lending operations and enabling them to raise more money from the market.

Under the Indradhanush roadmap announced last year, the government will infuse Rs 70,000 crore in state-owned banks over four years while they will have to raise further Rs 1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms Basel-III.

In line with the blueprint, PSBs are to get Rs 25,000 crore in each fiscal, 2015-16 and 2016-17. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19.

In the Budget 2017-18 speech on February 1, Jaitley announced capital infusion of Rs 10,000 crore for the next fiscal beginning April 1.