Public sector banks (PSBs) are set to receive Rs 9,000 crore in April-May 2010 in the first phase of recapitalisation announced in the Budget.
“For the first phase, we are looking at putting in an amount close to Rs 9,000 crore,” R Gopalan, secretary, financial services, said after a meeting with officials of the Reserve Bank of India to discuss issues related to financial inclusion.
Other than the Tier-1 capital requirements, credit flow of public sector banks will also be assessed by this month-end in order to finalise the names and number of banks entitled to receive the capital. “Calculations will have to go on now. We have to find out, as on March 31, what the outstandings and CRAR are,” said Gopalan.
The likely beneficiaries are Bank of Maharashtra, Dena Bank, Syndicate Bank, UCO Bank, Allahabad Bank, Andhra Bank, Oriental Bank of Commerce and Vijaya Bank, which are undercapitalised in terms of Tier-1 requirements.
Bank of Maharashtra has sought Rs 1,800 crore over 2-3 years.
“The government hasn’t intimated us yet on the form we will be receiving the money in, but it could be in the form of perpetual bonds or non-convertible debentures,” said Ajay Banerjee, general manager, Bank of Maharashtra.
Dena Bank has sought for Rs 1,300 crore over three years. “We have sought Rs 300 crore in the form of equity and Rs 1,000 crore in the form of preference shares,” said S K Jain, general manager, Dena Bank.
According to the Reserve Bank of India, the minimum capital adequacy ratio of banks should be 9% with a Tier-I capital adequacy ratio of at least 6%.
Finance minister Pranab Mukherjee had in the Budget announced capital infusion of Rs 16,500 crore in public sector banks to ensure they are able to maintain Tier-1 capital of at least 8%.
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