SBI to get Rs 2000 cr as part of Rs 14K cr banks fund infusion

Other banks like Indian Overseas Bank will be getting Rs 1,200 crore while Punjab National Bank will get Rs 500 crore

The Finance Ministry today decided to pump in Rs 2,000 crore in State Bank of India and Rs 1,800 crore each in IDBI Bank and Central Bank of India as part of the Rs 14,000 crore capital infusion plan for the current fiscal.

"SBI is getting Rs 2,000 crore. Bigger banks are getting more," Financial Services Secretary Rajiv Takru said here.

Besides the capital support from the government, public sector banks have the headroom to raise Rs 10,000 crore from the market though rights issue, Qualified Institutional Placement (QIP) or follow-on public offer without diluting existing government stake.

This money has been given to enhance equity capital not for any other purpose, he said, adding, "for the moment this is good enough to see them through."

Yesterday, Finance Minister P Chidambaram had more than adequately made clear that the government would be allocating Rs 14,000 crore through Budget, the Financial Services Secretary said.

"Other than this, banks board could take decisions on how they want to raise additional equity. They have there options, they have rights issue, they have QIP option they have FPO option.

"But in any case we have made amply clear that they could proportionately  tap the outside market, and increase the their equity. The banks would be able to generate Rs 10,000 crore," Takru said.

Other banks like Indian Overseas Bank would be getting Rs 1,200 crore while Punjab National Bank would get Rs 500 crore.

The second round of capital infusion may come in the fourth quarter of the current fiscal depending upon banks' requirements.

"We will be giving them more after judging their performance (based on concessional lending towards home, auto and consumer durable)," Takru said.

By the end of third quarter it would be amply clear how much additional lending banks would require, he added.

Asked about QIP of SBI, Takru said: "They would be raising the funds proportionately. The government has 62 per cent stake so they can raise funds from the market upto 38 per cent. It could be Rs 1,500 crore, Rs 1,600 crore and Rs 1,700 crore."

The SBI board would take a call on the QIP route. SBI board is meeting on October 30, he added.