Millennium Post

‘Capital infusion plan for PSU banks soon’

'We will very soon bring capital infusion plan in PSU banks to cabinet. It's almost ready,' he said at an event here.

Public sector banks require equity capital of Rs 2.4 lakh crore by 2018 to meet global Basel III norms on capital adequacy. For the current fiscal, the government has allocated Rs 11,200 crore for bank capitalisation.

On whether the government was contemplating bringing down its equity from 58 per cent to 52 per cent in PSU banks, Sandhu said: 'If banks have to raise money from market then the stake has to come down then only they can raise money. That is part of our paper.'

The government has been considering a proposal under which its equity could come down to 52 per cent from 58 per cent presently as part of recapitalisation exercise.

Sandhu said the instrument for share sales in banks will be partly qualified institutional placement (QIP) and partly public.

As per law, government holding at any moment must not come below 51 per cent to maintain the public sector character of PSU banks. At present, government shareholding in various banks varies between 56.26 per cent (Bank of Baroda) and 88.63 per cent (Central Bank of India).

The government has infused Rs 58,600 crore between 2011 to 2014 in the state-owned banks.
Finance Minister Arun Jaitley in the Budget speech had said that 'to be in line with Basel-III norms there is a requirement to infuse Rs 2,40,000 crore as equity by 2018 in our banks. To meet this huge capital requirement we need to raise additional resources to fulfil this obligation'.

While preserving the public ownership, the capital of these banks will be raised by increasing the shareholding of the people in a phased manner through the sale of shares largely through retail to common citizens of this country, the minister had said.
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