The Union government on Thursday approved a proposal to inject Rs 12,517 crore in public sector banks (PSBs) to help them enhance the lending activity and meet the capital adequacy norms.
About 9-10 public sector banks will benefit from the capital infusion programme, Finance Minister P Chidambaram told reporters after the meeting of the Cabinet.
The amount of capital infusion and the terms and conditions would be decided after consultation with each bank, he said, adding that the exercise was aimed at helping them meet stricter Basel-III norms relating to capital adequacy. The funds would be disbursed before March to these public sector banks. The government had already earmarked the amount in the Budget for the current fiscal.
The government has been infusing funds in PSBs in the last couple of years to strengthen their finances. It has injected about Rs 32,000 crore in the previous two financial years. During 2011-12, public sector banks got Rs 12,000 crore for improving their capital adequacy ratio. The government pumped in Rs 20,157 crore in public sector banks in 2010-11 to maintain tier I capital at 8 per cent and increase government's equity in some banks to 58 per cent. Capital infusion is based on an assessment made by the Finance Ministry about the capital needs of public sector banks for meeting Basel III norms, to be complied with in a phased manner, ending by March 2018.
On the need for fund infusion, the Finance Minister said: 'If banks have to expand business, capital has to be infused from time to time. In fact, I envisage, with the kind of growth of the banking business, capital has to be infused virtually every year for the next few years.’
SET TO THROW AWAY 10% EIL STAKE FOR JUST Rs 800 CR
The government on Thursday approved 10 per cent stake sale in Engineers India Ltd (EIL), which may fetch the government around Rs 800 crore.
'We expect to get around Rs 800 crore at current prices,' Finance Minister P Chidambaram told reporters after the meeting of the Cabinet Committee on Economic Affairs (CCEA).
The government currently holds 80.40 per cent stake in EIL. In 2010, the government divested 10 per cent stake through an FPO in EIL, a leader in engineering consultancy.
The stake will take place this fiscal, the minister said. EIL scrip was trading at Rs 229.80 on the BSE, down 3.73 per cent from its previous close.
For the July-September quarter of the current fiscal, EIL reported net profit of Rs 161.24 crore, up 10 per cent over the same period in 2011-12.
The government has proposed to raise Rs 30,000 crore by way of disinvestment in 2012-13.
So far this fiscal, the government has been able to realise just over Rs 6,900 crore through stake sale in PSUs. Further stake sale in Oil India and NTPC is lined up for January and February.
About 9-10 public sector banks will benefit from the capital infusion programme, Finance Minister P Chidambaram told reporters after the meeting of the Cabinet.
The amount of capital infusion and the terms and conditions would be decided after consultation with each bank, he said, adding that the exercise was aimed at helping them meet stricter Basel-III norms relating to capital adequacy. The funds would be disbursed before March to these public sector banks. The government had already earmarked the amount in the Budget for the current fiscal.
The government has been infusing funds in PSBs in the last couple of years to strengthen their finances. It has injected about Rs 32,000 crore in the previous two financial years. During 2011-12, public sector banks got Rs 12,000 crore for improving their capital adequacy ratio. The government pumped in Rs 20,157 crore in public sector banks in 2010-11 to maintain tier I capital at 8 per cent and increase government's equity in some banks to 58 per cent. Capital infusion is based on an assessment made by the Finance Ministry about the capital needs of public sector banks for meeting Basel III norms, to be complied with in a phased manner, ending by March 2018.
On the need for fund infusion, the Finance Minister said: 'If banks have to expand business, capital has to be infused from time to time. In fact, I envisage, with the kind of growth of the banking business, capital has to be infused virtually every year for the next few years.’
SET TO THROW AWAY 10% EIL STAKE FOR JUST Rs 800 CR
The government on Thursday approved 10 per cent stake sale in Engineers India Ltd (EIL), which may fetch the government around Rs 800 crore.
'We expect to get around Rs 800 crore at current prices,' Finance Minister P Chidambaram told reporters after the meeting of the Cabinet Committee on Economic Affairs (CCEA).
The government currently holds 80.40 per cent stake in EIL. In 2010, the government divested 10 per cent stake through an FPO in EIL, a leader in engineering consultancy.
The stake will take place this fiscal, the minister said. EIL scrip was trading at Rs 229.80 on the BSE, down 3.73 per cent from its previous close.
For the July-September quarter of the current fiscal, EIL reported net profit of Rs 161.24 crore, up 10 per cent over the same period in 2011-12.
The government has proposed to raise Rs 30,000 crore by way of disinvestment in 2012-13.
So far this fiscal, the government has been able to realise just over Rs 6,900 crore through stake sale in PSUs. Further stake sale in Oil India and NTPC is lined up for January and February.