Govt to infuse additional Rs 11,500 cr in PSU banks in FY16

Government is likely to infuse additional USD 1.8 billion (about Rs 11,500 crore) in public sector banks this fiscal over and above USD 1.2 billion earmarked in the Budget, Finance Secretary Rajiv Mehrishi said on Friday. "Will put additional USD 1.8 billion in PSU banks apart from USD 1.2 billion budgeted this year," he told reporters here. The government has earmarked Rs 7,940 crore in the Budget for recapitalisation of PSU banks for the current fiscal. Earlier this month, Mehrishi said the government intends to provide USD 9 billion (about Rs 57,000 crore) to public sector banks towards recapitalisation over the next two fiscals to meet global capital adequacy norms and for growth. Finance Minister Arun Jaitley had recently promised more capital infusion into public sector banks, saying there's "merit" in their demand for more funds over and above what was provided in the Budget. The government has already started assessment of capital requirement of public sector banks. It has already received presentation of 14 public sector banks. Speaking at an event earlier on Friday, Reserve Bank Deputy Governor R Gandhi said state-owned banks are "adequately" capitalised at present but would need additional money to comply with global capital adequacy norms in the future. 

According to an estimate, public sector banks would need an additional capital of Rs 2.40 lakh crore by 2018 to meet the Basel III capital adequacy norms. Keeping the huge capital requirements in mind, the Cabinet in December 2014 had allowed public sector banks to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52 per cent in phases.