Government to soon finalise 2nd tranche of capital infusion in PSBs

Finance Ministry is likely to finalise the second tranche of capital infusion in public sector banks in the next three weeks.

The decision on the second round of capital infusion is slated to be crystallised before the Budget, sources said.

The government has already announced fund infusion of Rs 22,915 crore, out of the Rs 25,000 crore earmarked for 13 PSBs for the current fiscal. Of this, 75% has already been released to them.

The remaining amount will be linked to performance with particular reference to greater efficiency, growth of both credit and deposits and reduction in the cost of operations, the Finance Ministry had said.

The first tranche was announced with the objective of enhancing their lending operations and enabling them to raise more money from the market.

The capital infusion exercise for the current fiscal is based on an assessment of the compounded annual growth rate (CAGR) of credit growth for the last five years, banks' own projections of credit growth and an objective assessment of the potential for growth of each PSB, it had said.

Under Indradhanush roadmap announced last year, the government will infuse Rs 70,000 crore in state banks over four years while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms Basel-III.

In line with the blueprint, PSU banks are to get Rs 25,000 crore each in 2015-16 and 2016-17 fiscal. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19.