Public sector banks to get Rs14,000-cr government funding in 2013-14

The government of India has approved capital infusion of a total Rs14,000 crore in the public sector banks during the 2013-14 financial year, through preferential allotment of equity in its favour.

Of the total Rs14,0000 crore capital infusion proposed for the financial year, the highest share of Rs2,000 crore would go to the country's top lender State Bank of India, followed by IDBI Bank and Central Bank of India (Rs1,800 crore each).

Another 17 banks, including Punjab & Sind Bank and Indian Overseas Bank would get fresh capital between Rs100 crore and Rs1,200 crore respectively under the bank recapitalisation programme proposed in the union budget for the current fiscal year ending 31 March 2014.

State Bank of India may raise another Rs1,700 crore by selling shares to institutions.

The infusion of ''need-based capital'' by the government in public sector banks (PSBs) is done with the twin objective of adequately meeting the credit requirement of the productive sectors of economy as well as to maintain regulatory capital adequacy ratios in PSBs, a finance ministry release said on Wednesday.

The infusion of capital by the government, which is in addition to the PSBs' internally generated capital, will enable the banks to maintain a comfortable level of Tier-I CRAR, the release said.

Earlier this month, the government said it would provide funds to state-run banks to help them provide cheaper loans to buyers of two-wheelers and other consumer durables.

That funding, aimed at stimulating demand in the economy during the ongoing festival season, would be in addition to the Rs14,000 crore of investment proposed in the budget, the release said.

While the government said as the majority shareholder, it was committed to keep all PSBs adequately capitalised, it did not specify when it would provide the funds.

The government had infused about Rs12,517 crore in 13 PSBs during 2012-13.