Govt may infuse Rs19,440 cr into PSU banks this fiscal

The government is likely to infuse an additional Rs11,500 crore in state-run banks over and above the Rs7,940 crore budgeted for the year. This will take overall PSU bank capitalisation during the current financial year to Rs19,440 crore (nearly $3 billion).

"Will put additional $1.8billion in PSU banks apart from $1.2 billion budgeted this year," finance secretary Rajiv Mehrishi told reporters on Friday.

The government has earmarked Rs7,940 crore in the budget for recapitalisation of PSU banks this year. Earlier this month, Mehrishi said the government intends to provide Rs57,000 crore (about $9 billion) to public sector banks towards recapitalisation over the next two financial years to meet global capital adequacy norms and for growth.

RBI deputy governor R Gandhi, meanwhile, said public sector banks are "adequately" capitalised at present but will need additional capital in view of future credit growth. "Right now the banks are adequately capitalised,'' he said.

Finance minister Arun Jaitley had recently promised more capital infusion into public sector banks, saying there's ''merit" in their demand for more funds over and above what was provided in the budget.

The government has already started assessment of capital requirement of public sector banks. It has already received presentation of 14 public sector banks.

It is estimated that public sector banks would need an additional capital of Rs2,40,000 crore by 2018 to meet the Basel III capital adequacy norms.

Accordingly, the Cabinet had, in December 2014, allowed public sector banks to raise up to Rs1,60,000 crore from markets by diluting government holding to 52 per cent in phases.