12 State-run banks set to get Rs 48,239 crore fund infusion

New Delhi: The finance ministry on Wednesday announced a Rs 48,239 crore capital infusion in 12 public sector banks to help them meet regulatory capital requirements and make growth capital available for the stronger lenders.

With this tranche, the government has now infused Rs 1,00,958 crore of the Rs 1.06-lakh crore bank capitalisation programme for this financial year, financial services secretary Rajiv Kumar said. “It (pending Rs 5,000 crore) may be used for any contingency or for growth capital wherever it is necessary, including the amalgamated entity of Bank of Baroda,” he added.

The capital was allocated keeping in mind the thresholds set by the Reserve Bank of India in the prompt corrective action (PCA) framework, under which restrictions in terms of lending, among other curbs, were imposed on loss-making banks.

The biggest beneficiaries of the latest round of capital support were the better-performing Corporation Bank (Rs9,086 crore) and Allahabad Bank (Rs 6,896 crore).

Both lenders are under PCS and this capital infusion may help them exit the regime. With as many as 11 banks under PCA, the government has said credit growth has suffered and it has sought relaxation of the framework.

The RBI removed Bank of India, Bank of Maharashtra and Oriental Bank of Commerce from the PCA framework on January 31.


Kumar said the additional capital will help the two betterperforming banks to meet the requisite capital thresholds of 7.375% common equity tier-1 ratio, 8.875% tier-I ratio, 10.875 % capital-to-risk weighted assets ratio and the net non-performing assets ratio of below 6%. Bank of India and Bank of Maharashtra received Rs 4,638 crore and Rs 205 crore, respectively, to remain above PCA ratio triggers.

Kumar said Punjab National Bank will get Rs 5,908 crore, Union Bank of India Rs 4,112 crore, Andhra Bank Rs 3,256 crore and Syndicate Bank Rs 1,603 crore.

The government will pump in Rs 12,535 crore in four other banks under PCA — Central Bank of India, United Bank, UCO Bank and Indian Overseas Bank.


In December, finance minister Arun Jaitley said the government will put an additional Rs 41,000 crore in public sector banks (PSBs), enhancing the total recapitalisation in the current financial year to Rs 1.06 lakh crore from Rs 65,000 crore. In the same month, the government infused Rs 28,615 crore into seven PSBs through recapitalisation bonds.

Kumar observed that banks have posted a combined profit in the last quarter and that provisioning by and large is over. “Resolution in the current quarter would add recoveries,” he added.

He noted that recoveries from bad loans are expected to touch Rs 1.8 lakh crore in this fiscal year and that banks have so far recovered Rs 1 lakh crore under Insolvency and Bankruptcy Code. “It is expected to touch Rs 1.8 lakh crore by March 2019 with some of the resolutions at the final stage,” he said.