Fund requirement assessment for banks ongoing process: FinMin

Amidst reports that additional fund infusion may be needed for state-owned banks, the Finance Ministry today said assessment of their capital needs is an ongoing process that is reviewed periodically. "Capital assessment is an ongoing process. We continue to review as situation doesn't remain the same as it was one year ago," Financial Services Secretary Anjuly Chib Duggal said.The Indradhanush plan envisages Rs 70,000 crore of capital infusion over the next four years. Of this Rs 25,000 crore each will be infused in 2015-16 and 2016-17 and Rs 10,000 crore each in 2017-18 and 2018-19. The government estimates that state-run lenders would require Rs 1.8 trillion (Rs 1.8 lakh crore) over the next four years.

Banks will have to raise the balance Rs 1.10 trillion from the market. But the calculation has changed after RBI identified top 150 defaulters and asked banks to make provisions for those accounts and clean their books by March, 2017. Following this, the banks are demanding higher capital infusion from the government as they are unable to raise funds from the market in prevailing conditions.

Their stocks are trading on an average almost 60 per cent below their March, 2015 high, and also as higher provisioning norms have left them cash starved.Under Indradhanush, the government had already infused Rs 20,088 crore into 13 public sector banks last September and the remaining Rs 5,000 crore would be given in the March quarter looking at the performance in the first nine months.Many banks, who were looking to raise funds through qualified institutional placement, are planning to defer them as market conditions are not very conducive.

Recently, the country's largest lender State Bank of India chairperson Arundhati Bhattacharya had expressed skepticism about launching the proposed Rs 15,000-crore follow-on public offer of the bank this year citing poor market conditions."At this point of time, I don't think we have any clear plans to go to the market with a QIP issue. I don't think it will happen this year but then let's see," she had said.