Need house nod to recapitalise PSU banks: govt

Finance Ministry is likely to seek Parliament's nod for an additional Rs 10,000-12,000 crore to recapitalise about half a dozen public sector banks this fiscal, over and above Rs 6,000 crore earmarked in the budget.

"The total amount required for recapitalising public sector banks, including SBI, in the current fiscal is Rs 16,000-18,000 crore... We are looking at second supplementary [demands for grants]," Financial Services Secretary DK Mittal said.

The government has already allocated Rs 6,000 crore in the Budget for capital infusion in the state-owned banks during 2011-12 and the additional amount would be sought through second batch of supplementary demands for grants to be tabled in the Winter Session of Parliament.

"There are 5-6 banks which needs capital. Bank of India is also one of them," Mittal added.

As much as Rs 6,000 crore, he said, would be given to the selected PSU banks after October 31, the date by which the committee headed by Finance Secretary RS Gujral on bank capitalisation is likely to finalise its recommendations.

The committee was set up by the Finance Ministry to draw strategy for recapitalisation of public sector banks.

All the public sector banks and regional rural banks (RRBs) would be fully capitalised, Mittal said, adding the country has already decided to adopt the Basel III capital adequacy norms in a phased manner from 2013. "We want to capitalise banks well in advance," he added.

Finance Minister Pranab Mukherjee in his budget speech in February had said, "I propose to provide a sum of Rs 6,000 crore for the year 2011-12 to enable Public Sector Banks to maintain a minimum Tier I CRAR at 8%."

The government during 2010-11 had provided capital support to the tune of Rs 20,157 crore to public sector banks. The lenders which got funds from the government include Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce and UCO Bank.