FinMin likely to finalise Rs 540-bn capital infusion for PSBs by Nov end

Most of the banks would be getting growth capital for expanding their lending, particularly to MSMEs

The Finance Ministry is likely to finalise the second round of capital infusion for public sector banks (PSBs) towards the end of this month taking into account the latest quarter's performance, sources said.

In this round of fund infusion, most of the banks would be getting growth capital for expanding their lending, particularly to micro, small and medium enterprises (MSMEs). 

Last week, Prime Minister Narendra Modi launched a slew of measures, including loan sanction of up to Rs 10 million in less than an hour and relaxation in labour and environmental laws for MSMEs to give a boost to the sector, the country's second-biggest employer.

Second quarter result announcements of banks, barring one or two, would be over this week and subsequently the ministry would start discussions with them, sources said.
 

After assessing the requirement, the ministry is expected to finalise the capital infusion of about Rs 540 billion by November-end or by the first half of the next month.  

The ministry had earlier this year provided capital infusion of Rs 113.36 billion to five PSBs to help them meet their interest payment commitments. 
 

Punjab National Bank (PNB), hit by the Nirav Modi scam, got the highest amount of Rs 28.16 billion, while Allahabad Bank received Rs 17.9 billion.

Andhra Bank got capital support of Rs 20.19 billion, Indian Overseas Bank Rs 21.57 billion and Corporation Bank Rs 25.55 billion.  

The infusion was part of the remaining Rs 650 billion out of Rs 2.11-trillion capital infusion over two financial years.  
 

The government announced the Rs 2.11-trillion capital infusion programme in October last year.

As per the plan, the PSBs were to get Rs 1.35 trillion through re-capitalisation bonds, and the balance Rs 580 billion through raising of capital from the market.

Out of the Rs 1.35 trillion, the government has already infused about Rs 820 billion through recap bonds and the balance would be done during this fiscal.