Finmin to soon clear 1st tranche of capital infusion in PSBs

First tranche of capital infusion is likely to be less than Rs 20,000 crore

The Finance Ministry is likely to soon clear the first round of capital infusion in public sector banks (PSBs) that has been slated for the current financial year.

The proposal for capital infusion is expected to get approval from the Finance Minister Arun Jaitley shortly, sources said, adding that the first tranche is likely to be less than Rs 20,000 crore.

After the fourth quarter results, each bank made a detailed request for fresh fund infusion taking into account issues pertaining to non-performing assets (NPAs) or bad loans and growth projections.

Based on the suggestions, the Department of Financial Services finalised the first tranche of fund infusion, sources said.

The government has made the Budget provision of Rs 25,000 crore capital infusion in public sector banks for the current financial year. Jaitley, however, had assured the state-owned banks that the government would provide more funds if needed.

Past year, the government announced a revamp plan Indradhanush to infuse Rs 70,000 crore in state-owned banks over four years, while the banks themselves were expected to raise a further Rs 1.1 lakh crore from the market to meet their capital requirements in line with global risk norms Basel-III.

In line with the blueprint, PSBs will get Rs 25,000 crore this FY. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19.

During the past FY, 21 PSBs got fund support of Rs 25,000 crore. Of this, the State Bank of India got the highest amount of Rs 5,393 crore followed by the Bank of India at Rs 2,455 crore.

Besides, the government infused Rs 2,229 crore in the IDBI Bank, Rs 2,009 crore in the Indian Overseas Bank and Rs 1,732 crore the Punjab National Bank.