Public sector banks to get an additional Rs 11,500 crore from government

The government is expected to infuse an additional about Rs 11,500 crore in Public Sector Banks (PSBs) this fiscal, over and above the Rs 7,940 earmarked in the Budget, Finance Secretary Rajiv Mehrishi said on Friday. "Will put additional $1.8 billion (approximately Rs 11,500 crore) in PSBs apart from $1.2 billion (approximately Rs 7,940 crore) budgeted this year," he told reporters.

Earlier this month, Mehrishi had said that the government intends to provide $9 billion (about Rs 57,000 crore) to PSBs for recapitalisation over the next two fiscals, meet global capital adequacy norms and for growth.

Finance Minister Arun Jaitley recently promised more capital infusion into PSBs, saying there's "merit" in their demand for more funds over and above what was provided in the Budget.

The government has already started assessing the capital requirement of PSBs, and has already received presentation of 14 public sector banks.

Speaking at an event, Reserve Bank Deputy Governor R Gandhi said state-owned banks are "adequately" capitalised at present but would need additional money to comply with global capital adequacy norms in the future. According to an estimate, public sector banks would need an additional capital of Rs 2.40 lakh crore by 2018 to meet the Basel III capital adequacy norms.

Keeping the huge capital requirements in mind, the Cabinet in December 2014 had allowed PSBs to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52% in phases.