Bank Of Baroda To Get This Year’s Pending Infusion Of Rs 5,000 Crore

The government will pump in Rs 5,000 crore—the remaining capital infusion amount for the current fiscal year—in Bank of Baroda ahead of its merger with Vijaya Bank and Dena Bank, according to a senior official.

The government had on Feb. 20 infused Rs 48,239 crore in 12 public sector banks but skipped Bank of Baroda. While announcing the recapitalisation of public sector banks, Financial Services Secretary Rajiv Kumar had said that the pending Rs 5,000 crore may be used for any contingency or for growth capital in banks including amalgamated entity of Bank of Baroda.

Rating agency ICRA Ltd. expects the merged entity to receive Rs 5,500-6,000 crore from the government. “The capital infusion if announced will largely be in line with the estimates for financial year 2018-19 as we expect the merged entity will need additional capital on being classified as Domestic-Systemically Important Bank (D-SIB),” Anil Gupta, vice president at ICRA told BloombergQuint.

Classification of the merged entity as a D-SIB would mean an additional capital requirement for the lender, Gupta said.

With this, the government has spent the total amount of Rs 1.06 lakh crore set aside for capital infusion in public sector banks for the current financial year.

The government had earlier announced an infusion of Rs 65,000 crore in PSBs in 2018-19, and the government had sought Parliament’s approval in December to infuse an additional Rs 41,000 crore in state-owned banks.