Mahatma Gandhi is depicted on 100 rupee notes. (Photographer: Scott Eells/Bloomberg News)

Government To Infuse Rs 48,239 Crore In 12 State-Run Banks

The government will infuse Rs 48,239 crore in 12 public-sector banks to provide minimum regulatory capital to banks that come under Reserve Bank of India’s prompt corrective action framework, and to prevent weak banks from breaching the framework’s triggers.

With this, the government has infused Rs 1 lakh crore in public-sector banks in this financial year.

The capital infusion will:

  • Help Allahabad Bank and Corporation Bank—two of the better performing banks under PCA—meet the required threshold of 7.375 percent of common equity tier-1 ratio, 8.875 percent tier-1 ratio, 10.375 percent capital to risk weighted asset ratio and reduce net non-performing assets below 6 percent.
  • Enable Bank of Maharashtra and Bank of India - two of the three public-sector banks that have come out of the PCA framework - meet regulatory requirements.
  • Prevent Punjab National Bank, Union Bank of India, Syndicate Bank and Andhra Bank from breaching thresholds of the PCA framework.
  • Aid Central Bank of India, United Bank of India, UCO Bank and Indian Overseas Bank to meet minimum regulatory capital norms for CET 1, tier 1 and Capital to risk assets ratio.

After this tranche of capital infusion, Rs 5,000 crore will remain to be infused by the government in public-sector banks for the current financial year.

"It (pending Rs 5,000 crore) may be used for any contingency or for growth capital wherever it's necessary, including amalgamated entity of Bank of Baroda," Department of Financial Services Secretary Rajiv Kumar told reporters.