Finance Ministry to finalise capital infusion of Rs 8K cr within 15 days

The Finance Ministry is giving final touches to infusing around Rs 8,000 crore in public sector banks (PSBs) as part of its second and final tranche for the current financial year, 2015-16.

The second round of capital infusion is almost ready and in the next few days it should go to Finance Minister Arun Jaitley for approval, sources said.

The entire process should be over within a fortnight and then the respective bank would start receiving funds, sources added.

The second round of funding would be based on the strict parameters, sources said, adding that few banks would be eligible, and include those whose common equity Tier 1 (CET1) capital is lower than eight per cent.

Some of the banks eligible for fund infusion include IDBI Bank, Indian Overseas Bank and UCO Bank where CET1 has been less than eight per cent at the end of the third quarter of the current financial year.

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 per cent has already been released to them.

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

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 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, PSBs are to get Rs 25,000 crore in each financial year, 2015-16 and 2016-17. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19.

In the Budget 2017-18 speech on February 1, Jaitley announced capital infusion of Rs 10,000 crore for the next financial year beginning April 1.