Capital break-up for PSBs announced, SBI bags biggest share -Governance Now

Capital break-up for PSBs announced, SBI bags biggest share

The government has divided the Rs 14,000-crore budgeted capital among 20 PSBs with SBI receiving the biggest chunk (Rs 2,000 crore), followed by Central Bank of India and IDBI Bank getting Rs 1,800 crore each

GN Bureau | October 23, 2013

The government announced on Wednesday the amount of capital to be infused in twenty public sector banks out of the total budgeted figure of Rs 14,000 crore through preferential allotment. The highest capital of Rs 2,000 crore has been given to the country's largest lender State Bank of India (SBI).

Just below SBI are both Central Bank of India and IDBI Bank which have bagged Rs 1,800 crore each followed by Indian Overseas Bank with Rs 1,200 crore and Bank of India with Rs 1,000 crore.

The others include Bank of Maharashtra (Rs 800 crore), Dena Bank and United Bank of India (Rs 700 crore), Bank of Baroda (Rs 550 crore), Canara Bank, Punjab National Bank and Union Bank of India (Rs 500 crore), Corporation Bank (Rs 450 crore), Allahabad Bank (Rs 400 crore), Vijaya Bank (Rs 250 crore), Andhra Bank, Syndicate Bank and UCO Bank (Rs 200 crore), Oriental Bank of Commerce (Rs 150 crore) and finally, Punjab and Sind Bank (Rs 100 crore).

The announcement of the break-up of capital comes a day after finance minister P Chidambaram met PSB chiefs to take stock of their banks’ performance in terms of credit growth, level of non-performing assets (NPA) and loan recovery. The minister had clarified after the review meeting that infusing funds was only a capitalisation exercise and it should not be seen as an attempt to increase government shareholding in PSBs.

“The capital infusion by the government of India in PSBs is done with the twin objective of adequately meeting the credit requirement of the productive sectors of economy as well as to maintain regulatory capital adequacy ratios in PSBs. The government of India, as the majority shareholder, is committed to keep all PSBs adequately capitalized. Infusion of capital by government in PSBs is in addition to their internally generated capital to enable the banks to maintain a comfortable level of Tier-I capital to risk assets ratio (CRAR),” the finance ministry said in a statement.

The infusion of capital is set to fuel the businesses of the cash-strapped banks that have been struggling to maintain profitable at a time when credit demand is slow and the number of bad loans is continuously rising.

Given the slow pace of economic growth, Chidambaram had announced the infusion of Rs 14,000 crore as capital in the 2013-14 budget to PSBs up from the Rs 12,517 crore allotted to 13 PSBs in the previous fiscal.

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