The Telegraph
Wednesday , May 14 , 2014
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Rs 8000cr prop on way

P. Chidambaram with chiefs of PSU banks and financial institutions in New Delhi on Tuesday. (PTI)

New Delhi, May 13: The government is planning to infuse an additional capital of around Rs 8,000 crore into public sector banks in 2014-15 to expand their capital base and is examining ways to help them raise funds.

“In the interim budget, the government provided Rs 11,200 crore for public sector banks, although there was a higher requirement and the balance which can be Rs 6,000-8000 crore,” financial services secretary G.S. Sandhu said after a meeting with the heads of PSU banks chaired by finance minister P. Chidambaram.

The additional provision will be made when the government tables the budget for 2014-15 in June-July, he said. Officials said such provisions were planned ahead and usually accepted even if there was a change in government.

The Centre infused Rs 14,000 crore into PSU banks during 2013-14. Of this, the SBI got Rs 2,000 crore, while Indian Overseas Bank received Rs 1,200 crore.

According to the RBI, lenders will need an additional capital of Rs 5 lakh crore to meet Basel III norms.

The government, which owns 70 per cent in PSU banks, will have to pump in Rs 90,000 crore equity to retain its shareholding in PSU banks at the current level to meet the norms. Of the total Rs 5 lakh crore, equity capital will constitute Rs 1.75 lakh crore and non-equity capital Rs 3.25 lakh crore.

The RBI recently extended the deadline for banks to implement the Basel III norms by one year to March 2019.

Meanwhile, Chidambaram said tough steps needed to be taken against wilful defaulters. He said the position that “promoter is prosperous but company is sick” was not acceptable and asked the “banks to form a consortium and take joint action against such defaulters”.