PSU banks can alter authorised share capital: FinMin

Banks can increase or decrease authorised capital with govt and RBI nod without being limited by ceiling of Rs 3,000 cr

State-owned banks can now increase capital while issuing preference shares, rights issues or bonus shares without being limited by the earlier ceiling of Rs 3,000 crore, the Finance Ministry said today.

The restriction has been removed following passage of the Banking Laws (Amendment) Bill 2012 in Parliament. The Bill will become a law after its is signed by the President.

The ministry said the Bill will strengthen the regulatory powers of the Reserve Bank and further develop the banking sector in India.

"It will also enable the nationalised banks to raise capital by issue of preference shares or rights issue or issue of bonus shares.

"It would also enable them to increase or decrease the authorised capital with approval from the Government and RBI without being limited by the ceiling of a maximum of Rs 3,000 crore," the ministry added.

The government had to drop a controversial clause which would have allowed banks to enter into forward trading under intense opposition from different parties.

The Bill, which was passed by both the Houses of Parliament in the just concluded Winter Session, has also paved the way for new bank licences by RBI.

"This would not only help in achieving the goal of financial inclusion by providing more banking facilities but would also provide extra employment opportunities to the people at large in the banking sector," the ministry added.