Govt mulls pumping in Rs 30,000 cr more in PSBs

New Delhi, December 13 

The government is considering additional capital infusion of up to Rs 30,000 crore in public sector banks (PSBs) as they have been unable to raise required funds from the markets, sources said.

As part of the capital infusion plan announced by the Finance Ministry in October 2017, the government envisaged that PSBs would raise Rs 58,000 crore from the stock markets by March 2019 to meet Basel III norms. However, due to subdued market conditions, banks have been unable to raise enough funds from the markets so far.

In addition, non-performing assets of many banks have seen a spurt in the first two quarters of this fiscal, putting stress on their bottomlines. However, the banks have got a breather in respect of Capital Conservation Buffer (CCB), a part of Basel III norms. The RBI, at its last board meeting, deferred the requirement to meet the CCB target by a year, leaving about Rs 37,000 crore in the hands of banks.

Despite this relaxation, PSBs need more funds to meet global capital norms called Basel III as the RBI has retained the capital to risk weighted assets ratio (CRAR) at 9 per cent, sources said, adding, the shortfall could be around Rs 30,000 crore.

However, sources said the matter is being considered by the government and the final decision is expected in the next few weeks. — PTI

The ‘Recap’ 

In 2017, the government had decided to capitalise PSBs in a front-loaded manner:

Rs 2.11 lakh cr  to be infused by 2019

Funding pattern

• Rs 18,139 cr budgetary provisions
• 1.35 lakh cr recapitalisation bonds Rs 58,000 cr by raising capital from market while diluting govt equity 

The balance

Rs 42,000 crore is the remaining amount of capital infusion programme