Decision on Rs 8,800 cr capital infusion into PSU banks by Dec

Decision on Rs 8,800 cr capital infusion into PSU banks by Dec

The second tranche would come after the July-September quarter results of the banks. The decision on capital support to individual banks is expected by December, official sources said.

The second quarter results would give an idea about how many banks would require how much funds for shoring up their Tier-I capital over 8 per cent, sources said.

The government has already announced infusing Rs 15,000 crore into public sector banks during the current fiscal. Of this, the government has already approved over Rs 6,200 crore support to five banks, including Union Bank of India.

Finance Minister Pranab Mukherjee in his Budget speech had announced that the government planned a capital support of Rs 15,000 crore to public sector banks during the current fiscal to ensure that these entities are able to attain a minimum 8 per cent Tier-I capital by March 31, 2011.

The Union Cabinet has also approved the capital infusion plan, which will help banks increase the lending capacity by Rs 1.85 lakh crore.

This additional credit availability, as per the Cabinet decision, is likely to benefit employment-oriented sectors, especially agriculture, micro and small enterprises and entrepreneurs.

Earlier this month, the government approved infusion of Rs 6,211 crore into five public sector banks, a move which will help in lending an additional Rs 77,637 crore to various sectors of the economy.

The banks, which got capital support from the government included Union Bank of India, Bank of Maharashtra, IDBI Bank, UCO Bank and Central Bank India.