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21-Feb2019

Finance Ministry to recapitalise 12 PSBs with capital infusion of Rs 48,239 crore

In a bid to take public sector banks (PSBs) out of Reserve Bank of India's (RBI) prompt corrective action framework, the Finance Ministry has decided to recapitalise 12 PSBs with capital infusion of Rs 48,239 crore in this fiscal to help them maintain regulatory capital requirements and finance growth plans. Financial Services Secretary Rajiv Kumar said with this funding, the total amount of capital infusion would increase to Rs 1,00,958 crore of the planned recapitalisation of Rs 1.06 lakh crore for PSBs for the current fiscal. The remaining Rs 5,000 crore capital infusion would be used as buffer for any contingency or growth capital for Bank of Baroda which is in the process of merging Dena Bank and Vijaya Bank with itself.

Corporation Bank is the biggest beneficiary of this round of capital infusion with Rs 9,086 crore of funding, followed by Allahabad Bank with Rs 6,896 crore. Explaining the rationale for giving higher capital to these two banks, Kumar said equipping these two better performing banks, currently under the Prompt Corrective Action (PCA) supervision of the RBI, would help meet requisite capital thresholds of 7.375 CET-1 ratio, 8.875% Tier I ratio, 10.875% of capital-to-risk weighted assets ratio (CRAR) and the net NPA ratio threshold of below 6%.

Further, Rs 4,638 crore and Rs 205 crore will be provided to Bank of India and Bank of Maharashtra. These banks have recently come out of the regulatory supervisory framework PCA of the RBI. Kumar further 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. The government in December had increased the outlay by Rs 41,000 crore for infusion in PSBs. Subsequently, the government infused Rs 28,615 crore into 7 PSBs through recapitalisation bonds.


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