Press Esc to close

Rs 12,517-cr cap infusion plan for PSBs cleared

NEW DELHI, Jan 10, 2013, DHNS ; 22:00 IST

Govt agrees to 10% stake sale in EIL

The government on Thursday cleared a proposal to infuse Rs 12,517 crore in public sector banks (PSBs) to help them meet their capital adequacy norms .

About 10 banks are expected to benefit from the move, Union Finance Minister P Chidambaram said after the cabinet meeting.

However, the amount of capital infusion to each bank and the terms and conditions will be decided after consultation with the banks. The exercise is aimed at helping the banks meet Basel-III norms.

PSBs are plagued by rising non-performing assets (NPA) and write-offs.

Chidambaram said the combined injection of capital would not exceed the Rs 15,000 crore provisioned in the budget for the fiscal year ending 2013. Banks like Union Bank of India are seeking for Rs 1,500 crore recapitalisation.

An official statement issued on the Cabinet Committee on Economic Affairs’ decision, said that the infusion will ensure compliance to the regulatory norms on capital adequacy and will cater to the credit needs of productive sectors of the economy as well as withstand the impact of stress in the economy.

“This will also support national and international banking operations of public sector banks (PSBs) and will boost the confidence of investors and market sentiments,” the statement said.

The infusion of Rs. 12,517 crore in the equity capital of PSBs will enable them to drive credit growth. This additional availability of credit will cater to the credit needs of our economy and will also benefit employment oriented sectors, especially agriculture, micro & small enterprises and entrepreneurs in promotion of their economic activities which, in turn, can contribute substantially to the growth of the economy.

The government is committed to keep all the public sector banks financially sound and healthy so as to ensure that the growing credit needs of our economy are adequately met. To meet the credit requirement of the economy, banks would require capital funds commensurate to the increase in their Risk Weighted Assets,” it said.

Implementation of Basel III capital regulations enhances requirement of core equity capital by banks due to higher capital ratios. The Basel III capital ratios will be fully phased in as on March 31 2018, the statement said.

The BSE Bankex closed at 14,699.60, 91 points higher from its previous close.

The CCEA also cleared 10 per cent disinvestment in Engineers India . The government currently holds 80.50 per cent stake in EIL. This divestment is part of government aim to raise Rs 30,000 crore from share sales in state-run companies in fiscal year 2013.

Thus far, the government has managed to garner just under 25 per cent of that target.
The share price of EIL closed at Rs 228.90 on the Bombay Stock Exchange on Thursday, down 4.11 per cent from its previous close.

Go to Top

More from this section
Most trending stories
Photo Gallery
A helicopter is seen flying over the besieged town of Douma, Eastern Ghouta...

A helicopter is seen flying over the besieged town of Douma, Eastern Ghouta...

Transgender Shanavi Ponnusamy arrives at the chief minister's cell at...

Transgender Shanavi Ponnusamy arrives at the chief minister's cell at...

Lufthansa tests humanoid robot 'Josie Pepper' at airport...

Lufthansa tests humanoid robot 'Josie Pepper' at airport...

Chief of the Air Staff, Air Chief Marshal B.S. Dhanoa presents a memento to the...

Chief of the Air Staff, Air Chief Marshal B.S. Dhanoa presents a memento to the...

Alpine Skiing - Pyeongchang 2018 Winter Olympics - Women's Downhill Training...

Alpine Skiing - Pyeongchang 2018 Winter Olympics - Women's Downhill Training...

Canadian Prime Minister Justin Trudeau greets business leaders at the end of...

Canadian Prime Minister Justin Trudeau greets business leaders at the end of...

Greenpeace demonstrators in all-over bodysuits protest against pollution...

Greenpeace demonstrators in all-over bodysuits protest against pollution...

A Marathi mother-daughter duo during a procession to commemorate Shivaji Jayanti...

A Marathi mother-daughter duo during a procession to commemorate Shivaji Jayanti...

Prime Minister Narendra Modi greets the saints during the...

Prime Minister Narendra Modi greets the saints during the...

Raphael Manet checks the growth of radish seedlings as he works at the...

Raphael Manet checks the growth of radish seedlings as he works at the...

Like us on Facebook

Copyright 2017, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523
Powered by Yodasoft Technologies Pvt. Ltd.