Govt to ask each PSB about its capital needs

Govt to ask each PSB about its capital needs

 The government has asked public sector banks to give a detailed presentation on how much capital they actually need to boost their lending business without coming into stress.

The presentations, to be spread over the next fortnight, will be held in Delhi, Mumbai and Bengaluru. Minister of State for Finance Jayant Sinha and the financial services secretary will be present in each of the meetings scheduled on five different days in three metros. The first round of representations from Kolkata-based banks such as UCO Bank and United Bank of India were conducted on Friday in New Delhi. The final round would be conducted on July 3 in Bengaluru.

Andhra Bank, Indian Overseas Bank, Corporation Bank, Canara Bank, Syndicate Bank and Vijaya Bank would be giving their presentations in Bangaluru.

The aim is to get speedy Cabinet approval for additional funds through supplementary grant in the Monsoon session of Parliament.

The government had allocated close to Rs 8,000 crore for capital infusion in public sector banks but it was subsequently termed inadequate by the lenders as they need additional funding to meet Basel-III norms of capital adequacy.

Earlier, during the quarterly review of public sector banks’ performance held in March, the ministry felt banks should find out about their own resources for raising capital and also work out their own plan for raising capital from the market. The Finance Ministry subsequently allowed state-run banks to bring down the government’s stake to 52 per cent. But adverse market conditions, as well as unfavourable valuations, given their high levels of bad debt, have made it difficult for banks to raise funds.

State-run banks require an estimated Rs 10,000 crore-Rs 20,000 crore of equity capital and Rs.30,000 crore- Rs 40,000 crore of additional tier-I capital in 2015-16.a

Govt the saviour

Govt seeks detailed presentation from PSBs on their capital requirement
Presentation to be spread over next fortnight and held in Delhi, Mumbai and Bengaluru
Move aims for fast Cabinet approval for additional fund through supplementary grant
PSBs need arpund Rs 10,000 crore-Rs 20,000 crore of equity capital

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