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Wednesday, July 18, 2018

Capital infusion in public sector banks to be finalised soon

The capital infusion through preferential placement of equity,the quickest mode of raising equity.

Written by Agencies | New Delhi | Published: January 1, 2012 3:12:26 pm

The government is expected to finalise a fund infusion into state-owned banks to boost their capital and its shareholding this month.

Final shape is being given to capital infusion proposals of the public sector banks. The decision is expected during the month,official sources said.

The capital infusion through preferential placement of equity,the quickest mode of raising equity.

The government has already announced that it is committed to providing adequate capital to public sector banks so as to maintain their Tier-I capital at 8 per cent.

State Bank of India,Bank of Baroda and Union Bank of India,IDBI Bank and Syndicate Bank are some of the lenders which will be benefited by the capital infusion initiative of the government.

The government has made Budget provision of Rs 6,000 crore for capital infusion in public sector banks during the current fiscal.

In 2010-11,the government had provided capital support to the tune of Rs 20,157 crore to public sector banks.

Most of the public sector banks got capital support from the government during the last fiscal. These banks included Punjab National Bank,Bank of Baroda,Union Bank of India,Oriental Bank of Commerce,UCO Bank and Dena Bank.

It is to be noted that Financial Services Secretary D K Mittal had said that the state-run banks would be requiring about Rs 3.5 lakh crore by 2021.

A committee headed by Finance Secretary R S Gujral is working out a strategy for capitalisation of public sector banks over a period of next 10 years.

The Finance Ministry told banks that the capital support from the government in the future will be linked to their financial and functional efficiency.

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