FinMin initiates discussions with PSU banks for capital infusion

The government has initiated discussions with public sector banks (PSBs) for second round of capital infusion, a senior Finance Ministry official said.

All the banks have asked for recapitalisation programme to be advanced, Financial Services Secretary Rajiv Kumar said here.

Finance Minister Arun Jaitley Tuesday committed capital support to banks after meeting heads of public sector lenders.

"Some of them did mention that the PCA (prompt corrective action) guidelines should be revisited because that is indirectly impacting their lending ability and that government should be more upfront in the capital requirement of some of these banks.

"I have assured them that we will immediately look at this subject because we are as keen as them, as every Indian is, that this opportunity is not missed because we want the cycle of high consumption, high growth, NPA recoveries, credit offtake really to be utilised to the fullest in order to help economy," Jaitley had said.

The government will infuse Rs 65,000 crore in the banks during the current fiscal as was announced earlier, he said.

The government in July decided to infuse Rs 11,336 crore in five state-owned lenders, including Punjab National Bank, Corporation Bank and Andhra Bank to help them meet regulatory capital requirement.

The infusion was part of remaining Rs 65,000 crore out of Rs 2.11 lakh crore capital infusion over two financial years.

The government announced the Rs 2.11 lakh crore capital infusion programme October last year. As per the plan, the public sector banks (PSBs) were to get Rs 1.35 lakh crore through re-capitalisation bonds, and the balance Rs 58,000 crore through raising of capital from the market.

Out of the Rs 1.35 lakh crore, the government has already infused about Rs 71,000 crore through recap bonds in the banks and balance would be done during this fiscal.

PSBs are also planning to tap the markets to raise more than Rs 50,000 crore this fiscal to shore up their capital base for business growth and meeting regulatory global risk norms.

Meanwhile, PNB Wednesday said it plans to seek Rs 5,431 crore capital support from the government.

The meeting of the bank's board will take place Thursday for considering infusion of Rs 5,431 crore by the government by way of preferential issue of equity share and fixing date of extraordinary general meeting (EGM) for obtaining shareholders' approval in this regard, PNB said.