Capital infusion in PSBs rests on December review

Rules out plan to take World Bank loan for equity infusion

Rajeev Takru, secretary in the Department of Financial Services, said banks weren’t finding it difficult in carrying out their lending operations

In December, the Centre would review the performance of public sector banks in lending to the retail segment — consumer, automobile and home loans — before deciding on infusing additional capital in these.

This festive season, banks have announced various schemes to push consumer loans. While these schemes might run till the end of January 2014, the finance ministry would review banks’ performances in December, Rajeev Takru, secretary in the Department of Financial Services, said here.

If the government infuses additional capital in these banks, it would be over and above the Rs 14,000 crore it would provide public sector lenders this financial year to meet the credit requirement of the economy’s productive sectors and maintain the capital adequacy ratios required.

Takru said banks weren’t finding it difficult in carrying out their lending operations. They were free to decide the fields they wanted to lend to, he added. Each bank had contributed differently to different sectors (in terms of loans), he said, adding in sectors in which banks had launched schemes, no bank was uncomfortable.

On whether the government might approach a multilateral agency such as the World Bank for a loan to be used for capital infusion, Takru said there was no such plan, adding the government could garner resources for bank capital by itself.