Govt may infuse Rs 2,350cr in Central Bank to boost capital base

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26 Aug, 2025 12:21

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In a bid to help the Central Bank of India meet capital requirements as per the Reserve Bank of India (RBI)'s guidelines, the government is planning to infuse Rs 2,350 crore in the bank, according to a report by Business Standard.

A notification for the release of the funds was issued on Monday.

This infusion will take the total capital infusion of the government in the public sector banks (PSBs) to Rs 13,600 crore in this financial year.

It is a part of the Centre's Rs 2.11 lakh crore recapitalisation plan for PSBs spread over two years in a attempt to shore up their finances, boost private investment and revive the economy.

Also read: Windfall for public sector banks: Govt announces Rs 2.11 lakh cr recapitalisation

The Central Bank of India requires the funds to maintain regulatory capital requirement while paying interest towards Additional Tier 1 (AT-1) bonds, a senior government official told the newspaper.

The banks have been finding it difficult to service these bonds due to high-level of non-performing assets (NPAs) and widening losses.

Lenders have been facing the risk of breaching the regulatory capital requirement because of these bonds, the report cites people aware of the matter as saying.

Centre may also look at recapitalising Bank of Baroda (BoB), Vijaya Bank, and Dena Bank before the proposed merger takes place, according to the report.

On September 17, the Centre announced the proposal to merge the three public sector lenders as a part of a consolidation of banks to deal with the mounting NPAs.

Also read: Govt proposes merger of Bank of Baroda, Dena Bank and Vijaya Bank

"Recapitalisation may happen in these banks even before the merger takes place to meet their capital and growth requirement," the official told the newspaper. The official did not mention the amount of capital infusion that is required for these banks.

In July, the government had infused Rs 11,300 crore in five public sector banks including Punjab National Bank (PNB) for similar reasons.

Also read: PNB gets Rs 2,816 cr as part of govt's capital infusion plan

The Centre had infused Rs 2,820 crore in PNB, Rs 2,550 crore in Corporation Bank, Rs 2,160 crore in Indian Overseas Bank, Rs 2,020 crore in Andhra Bank and Rs 1,800 crore in Allahabad Bank.

Under the Centre's recapitalisation plan, the PSBs were to receive Rs 1,350 lakh crore through recapitalisation bonds and the balance Rs 58,00 crore through fund raising from the market.

The government had infused Rs 71,000 crore through the recapitalisation bonds in the previous financial year.