PSU banks to get Rs 17K-cr capital infusion in FY12

The Finance Ministry is likely to infuse Rs 17,000 crore into public sector banks in the current fiscal to help them meet their capital requirements and enhance lending operations.

"We are looking to infuse Rs 17,000 crore into banks this fiscal. We are likely to put up bank recapitalisation proposal to the finance minister this weekend," a top official in the ministry said.

The official said that the ministry would seek additional Rs 12,000 crore through supplementary demands in Parliament, over and above the Budget provision of Rs 6,000 crore, for capital infusion in PSU banks during the current fiscal.

The government has already announced that it is committed to providing adequate capital to public sector banks so as to maintain their Tier-I capital at 8%.

State Bank of India, Bank of Baroda, Union Bank of India, IDBI Bank, and Syndicate Bank, are some of the lenders that would be benefited by the capital infusion initiative of the government.

In 2010-11, the government had provided capital support to the tune of Rs 20,157 crore to public sector banks.

Many public sector banks got capital support from the government during the last fiscal. These banks included Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank.

Financial Services Secretary DK Mittal had earlier said that the government would be infusing about Rs 3.5 lakh crore by 2021 into the state-run banks.

A committee headed by Finance Secretary RS Gujral is working out a strategy for capitalisation of public sector banks over a period of next 10 years.

The Finance Ministry has told banks that capital support from the government in future would be linked to their financial and functional efficiency.