India to infuse capital into state-run banks: Chidambaram

Most state-run banks need an infusion of additional capital and a decision will be taken in the next few weeks, Finance Minister P Chidambaram said on Thursday. Addressing a press conference after meeting heads of the banks, the finance minister said they had suffered a deterioration of non-performing assets and write-offs.

Open to handholding the stressed sectors, Chidambaram said, the government will work out a strategy to assist industry segments reeling under the impact of economic slowdown. "If the economy improves and growth improves, the sectors (which are not doing well) will recover. But in the meanwhile we will have to do some handholding and try to help these sectors recover", he said while addressing a press conference after meeting the heads of public sector banks. The government will have to look at rising non-performing assets (NPAs) sector wise and find ways and means to help them, he said, adding the "NPA is reflection of the slowdown in the economy". However, he added it is not an alarming situation and the economy is not contracting. The NPAs of the public sector banking group has increased by 0.98 percent in the one-year period ending September 2012 mainly on account of the stress being faced in sectors like infrastructure, steel, construction, textile, food process and telecom infrastructure, the Minister said. On the positive side, Chidambaram said housing and automobile sectors have been doing well on back of decline in EMIs. The Minister said the government would soon finalise capital infusion for the PSU banks and the beneficiaries would include Indian Overseas Bank, Central Bank of India and Bank of Maharashtra. The government had proposed to inject Rs 15,000 crore of capital in the PSU banks. Referring to the issue of new banking licences, Chidambaram said he had written to the Reserve Bank to initiate the process of issuing guidelines and start accepting the licences pending approval of the Banking Regulation Amendment Act by Parliament. Chidambaram said PSU banks have 84,000 vacancies in banks out of which 63,200 will be filled this year.