Govt to infuse Rs 15,888 cr in PSU banks

The government said it will provide capital support of Rs 15,888 crore to public sector banks and financial institutions during the next fiscal to strengthen their capital base.

“The government is committed to protect the financial health of Public Sector Banks (PSB) and financial institutions,” Finance Minister Pranab Mukherjee said.

“For the year 2012-13, I propose to provide Rs 15,888 crore for capitalisation of PSBs, Regional Rural Banks and other financial institutions, including Nabard,” he said.

The government is also examining the possibility of creating a financial holding company which will raise resources to meet the capital requirements of PSBs.

Mukherjee said the Government had initiated the process of capitalisation of 40 financially weak RRBs, which has been completed in respect of 12 RRBs by the end of February, 2012.

“I propose to extend the scheme of capitalisation of weak RRBs by another 2 years to enable all the States to contribute their share,” he said.

Mukherjee while presenting 2011-12 Budget last year had said: “I propose to provide a sum of Rs 6,000 crore for the year 2011-12 to enable Public Sector Banks to maintain a minimum Tier-I Capital to Risk Weighted Asset Ratio (CRAR) at 8 per cent.” He had said Rs 20,157 crore was provided for infusion in PSBs to maintain Tier I CRAR at 8 per cent and increase the government equity in some banks to 58 per cent in 2010-11.

On financial inclusion, he said that Swabhimaan campaign was launched to extend banking facilities through Business Correspondents to habitations having population in excess of 2,000 in 2011-12.

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