To ask Rs 14K cr more to recapitalise PSU banks: Bank Secy

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To ask Rs 14K cr more to recapitalise PSU banks: Bank Secy

The meeting to discuss the recapitalisation of SBI has ended without any decision being taken. The matter will probably up when the committee meets later this week, reports CNBC-TV18's Aakansha Sethi.

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Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

The meeting to discuss the recapitalisation of SBI has ended without any decision being taken. The matter will probably up when the committee meets later this week, reports CNBC-TV18's Aakansha  Sethi. However, the banking secretary DK Mittal said that the government will ask for an additional Rs 14,000 crore rupees in the second supplementary to recapitalise PSU banks, including SBI.

That will have to be finally cleared by the finance minister. This means that the department of economic affairs and the budgetary division will have to clear it and see whether they can accommodate Rs 14000 crore extra in a year when the fiscal deficit target is under heavy strain.

In the meeting led by the finance secretary and bankers, it was decided that five banks require recapitalization. This include Indian Bank , Syndicate Bank , Bank of Baroda , Bank of India and SBI.

SBI will get about Rs 6000 crore capital infusion. So, its requirement of tier - I capital of 8% will be completely met. The banking secretary has clarified that this is going to be done within this fiscal which means it will have to be financed through the budget.

He has completely ruled out a rights issue to do this. However he did say that they could consider a preferential share allotment for capital infusion into SBI but they are open to other options as well.

Meanwhile, they are expecting PSU bank's capital requirement to stand at about Rs 3 lakh 50 thousand crore. They are considering ways on how this banking requirement should be met and will be working on a strategy to meet the requirement.

Final decision on SBI and on the second supplementary demand of grants will be made in the next week's meeting.

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