The Hindu Business Line : Banks must raise Rs 45,521 cr from capital market: RBI

New Delhi April 18 Leading public and private sector banks would have to increase their Tier-I capital by about Rs 51,255 crore within March 31, 2009, including raising Rs 45,521 crore from the capital market to meet the Basel-II requirements on minimum capital adequacy of 9 per cent.

Simulation Study

The Reserve Bank of India has conveyed this to the Government after conducting a simulation study of 50 public and private sector banks. The banks include the entire lot of 19 nationalised banks, State Bank of India and its 7 associate banks, 7 new private sector banks and 16 old private sector banks.

The issue of the enhanced capital requirement of the banking system, especially the State-owned banks, would figure prominently in the meeting of the chief executives of public sector banks with the Union Finance Minister, Mr P. Chidambaram, on Thursday.

The RBI has said besides the Rs 45,521 crore from the market, the remaining amount required to meet the minimum capital requirement would have to be infused by the RBI itself (Rs 3,161 crore) and the Government (Rs 2,573 crore). This would be due to the requirement on the part of the RBI to retain its holding in State Bank of India at 55 per cent and for the Government to retain its holding in the nationalised banks above 51 per cent.

Capital Requirement

Incidentally, the Finance Ministry proposes to transfer RBI's holding in SBI to the Government. Among themselves, the 19 nationalised banks would have to raise Rs 21,211 crore while the enhanced capital requirement of the SBI group, including the seven associate banks, has been estimated at Rs 10,070 crore.

The 7 new private banks would have to raise Rs 16,038 crore while the equity requirement of 16 old private banks has been estimated at Rs 3,936 crore.

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