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Govt announces Rs 48,239 cr recapitalisation plan for 12 public sector banks

Kumar further said Punjab National Bank will get Rs 5,908 crore, Union Bank of India Rs 4,112 crore, Andhra Bank Rs 3,256 crore and Syndicate Bank Rs 1,603 crore.

India TV Business Desk India TV Business Desk
New Delhi Updated on: February 20, 2019 19:03 IST
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Rs 48,239 cr to be pumped in public sector banks

In order to help maintain regulatory capital requirements and finance growth plans, the finance ministry on Wednesday announced to pump in Rs 48,239 crore in 12 public sector banks. The government will infuse Rs 9,086 crore in Corporation Bank and Rs 6,896 crore in Allahabad Bank -- the two "better-performing" banks currently under the Prompt Corrective Action (PCA) supervision of the Reserve Bank of India (RBI), Financial Services Secretary Rajiv Kumar said. 

The remaining Rs 5,000 crore capital infusion would be used as buffer for any contingency or growth capital for Bank of Baroda which is in the process of merging Dena Bank and Vijaya Bank with itself.

"It (pending Rs 5000 crore) may be used for any contingency or for growth capital wherever it is necessary including amalgamated entity of Bank of Baroda," Kumar said.

Corporation Bank is the biggest beneficiary of this round of capital infusion with Rs 9,086 crore of funding, followed by Allahabad Bank with Rs 6,896 crore.

Explaining the rationale for giving higher capital to these two banks, Kumar said equipping these two better performing banks, currently under the Prompt Corrective Action (PCA) supervision of the RBI, would help meet requisite capital thresholds of 7.375 CET-1 ratio, 8.875 per cent Tier I ratio, 10.875 per cent of capital-to-risk weighted assets ratio (CRAR) and the net NPA ratio threshold of below 6 per cent.

Further, Rs 4,638 crore and Rs 205 crore will be provided to Bank of India and Bank of Maharashtra. These banks have recently come out of the regulatory supervisory framework PCA of the RBI.

Kumar further said Punjab National Bank will get Rs 5,908 crore, Union Bank of India Rs 4,112 crore, Andhra Bank Rs 3,256 crore and Syndicate Bank Rs 1,603 crore.

The government will pump in Rs 12,535 crore in four other banks under PCA -- Central Bank of India, United Bank, UCO Bank and Indian Overseas Bank.

The government in December had increased the outlay by Rs 41,000 crore for infusion in public sector banks. As a result, the total recapitalisation in the current fiscal from Rs 65,000 crore to Rs 1.06 lakh crore.

Subsequently, the government infused Rs 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds. 

(With agency inputs)

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