8 PSBs to raise capital from market by March

As many as eight public sector banks (PSBs) have decided to raise capital from the market within four months, as part of the Rs 2.11 lakh crore recapitalisation plan, according to official sources.

Some banks have already received approval from the Finance Ministry, while others are in the process of getting the green signal for raising capital either through private placement or the rights issue, they said. Most banks are preferring the Qualified Institutional Placement (QIP) route, sources said, adding that Punjab National Bank (PNB) would be the first to hit the market to raise Rs 5,000 crore. Bank of Baroda, Bank of India, Union Bank of India Allahabad Bank and Andhra Bank are also gearing up for the share sale, they said.

Finance Minister Arun Jaitley in October had announced an unprecedented Rs 2.11 lakh crore two-year road map to strengthen PSBs, reeling under high NPAs or bad loans, which have increased to Rs 7.33 lakh crore as of June 2017, from Rs 2.75 lakh crore in March 2015.

The plan includes floating recapitalisation bonds of Rs 1.35 lakh crore, and raising Rs 58,000 crore from the market by diluting governments stake. The government equity, as per the current policy, can come down to 52% in state-owned banks. Jaitley had also announced that banks would get about Rs 18,000 crore under the Indradhanush plan over the next two years.