The Telegraph
Sunday , January 20 , 2013
Since 1st March, 1999
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Board seal on State Bank cash prop

New Delhi, Jan. 19: The State Bank of India (SBI) today announced it would get Rs 3,004 crore as part of the government’s capital infusion plan for the current fiscal.

The fund infusion will enable the bank to support national and international operations undertaken through its subsidiaries and associates, the SBI said in a BSE filing.

“The central board of the bank in its meeting today approved the infusion of capital funds in the bank by the Government of India to the tune of Rs 3,004 crore during 2012-13,” it said.

The capital will be infused via preferential allotment of equity shares to the government. The proposal is subject to necessary regulatory approvals, it said.

Last fiscal, the government had infused Rs 7,900 crore in SBI to increase the tier-I capital of the country’s largest bank. After the capital infusion, the government’s holding in SBI rose to 61.58 per cent from 59.4 per cent.

Earlier this month, the government had approved an infusion of Rs 12,517 crore in around 10 state-owned banks by March.

The government had already earmarked the amount in the budget for the current fiscal. The government has been infusing funds in public sector banks in the last couple of years to strengthen their finances.

It has injected about Rs 32,000 crore in the previous two financial years.

During 2011-12, public sector banks got Rs 12,000 crore for improving their capital adequacy ratio.

The government pumped in Rs 20,157 crore in public sector banks in 2010-11 to maintain the tier I capital at 8 per cent and increase the government’s equity in some banks to 58 per cent.

Capital infusion is based on an assessment made by the finance ministry about the capital needs of public sector banks for meeting Basel III norms, to be complied with in a phased manner, by March 2018.

The Reserve Bank had issued guidelines for Basel III last year to strengthen the risk management mechanism. The implementation of the capital adequacy guidelines was to begin from January 2013. However, the RBI recently deferred it by another three months.