Efficient PSU banks to be rewarded, to get Rs 6990 cr -Governance Now

Efficient PSU banks to be rewarded, to get Rs 6990 cr

Govt has been infusing capital to those banks whose equity erosion has taken place

GN Bureau | February 7, 2015

#psu #banks #capital #rewards #canara bank #sbi #syndicate bank #Allahabad ban

Finance minister in the budget speech talked about the need of infusing more capital in the public sector banks (PSBs) to keep them in line with Basel-III norms. Following which finance ministry had asked the all public sector banks to submit capital raising plans.

Giving the proposals a concrete shape government has now decided to infuse Rs.6990 crores in nine public sector banks (PSBs) for which orders are being issued. This year, the government has adopted new criteria under which only those banks with comparatively more efficient working would be rewarded with extra capital for their equity so that they can further strengthen their position.

The methodology for deciding the amount to be infused in these banks has been based on efficiency parameters. First of all, weighted average of return on assets (ROA) for all PSBs for last three years put together was arrived at and all those who were above the average have been considered.

The second parameter that has been used is return on equity (ROE) for these banks for the last financial year. Those who have performed better than average have been rewarded.

In a statement the finance ministry said, “The Government of India is conscious of the fact that a lot of reforms are required in the Public Sector Banks (PSBs). With a view to crystallize idea for reforms, two-day Retreat of CMDs of Banks and financial institutions called 'Gyan Sangam’ was held at Pune in the first week of January.”

This retreat generated an agenda in which banks themselves were supposed to undertake certain activities individually or jointly and there were certain things which were supposed to be done by the Government.

One of the general principles adopted during the retreat was that efficient banks should be encouraged. For the last few years, Government of India has been infusing capital to those banks whose equity erosion has taken place. Therefore, this year, the Government of India has adopted the new criteria in which the banks which are more efficient would only be rewarded with extra capital for their equity so that they can further strengthen their position.

List of Banks which will be infused with capital

	Name of the Bank	Amount (Rupees in crore)
1	State Bank of India	2970
2	Bank of Baroda	1260
3	Punjab National Bank	870
4	Canara Bank	570
5	Syndicate Bank	460
6	Allahabad Bank	320
7	Indian Bank	280
8	Dena Bank	140
9	Andhra Bank	120
	Total	6990

Comments

Other News

Here’s an I.D.E.A. for career growth and success

Success in today’s professional organisation is no longer solely determined by academic qualifications, technical expertise or years of experience. While these attributes do matter, organisations increasingly value individuals who demonstrate the right mindset and behavioural qualities. The ability

PM interacts with CEOs, founders of space startups

Prime minister Narendra Modi interacted with CEOs and Founders of 20 Space Startups at Seva Teerth on Friday. CEOs of leading companies in the space sector working in diverse fields ranging from building rockets and reusable semi-cryogenic launch vehicles, avionics, satelli

From one cow to a dairy business

In 2012, Anita Dash wasn`t dreaming of building a dairy brand. She wasn`t studying business models or planning market expansion. Like countless mothers across India, her focus was on something much simpler: giving her children a better future. At the time, her most valuable

Ethanol blending: The two sides of a story

India`s crude oil consumption is estimated to be around 88.5% imported from abroad. This one single figure is also responsible for why ethanol has become both an economic strategy and fuel policy at the same time. In an economy like India, which depends so heavily on foreign oil, any increase in internat

Food inflation: Not a macroeconomic statistic but a developmental indicator

India`s retail inflation shows a reassuring picture at first glance. According to the latest data, Consumer Price Index (CPI) inflation edged up to 4.38% in June 2026 from 3.93% in May 2026, but continued to remain within the Reserve Bank of India`s (RBI) target band of 4% (+/- 2%). However, beneath this

Skin in the game or masterful market timing?

When a company founder opens their personal chequebook to buy shares in their own business, stock markets usually applaud. To the average retail investor, it feels like the ultimate vote of confidence, a sign that the people running the show have real skin in the game and believe brighter days are ahead.