The Hindu Business Line : Govt ready to infuse more capital into Central Bank

New Delhi, June 18 The Finance Minister, Mr P. Chidambaram, on Wednesday urged the board of Central Bank of India (CBI) to take steps to grow the bank’s bottomline and also shore up its capital base even as he assured that the Government was willing to provide additional capital, if required, to support its growth.

“There is some capital constraint in the bank. While the topline growth is high, its bottomline is not growing enough and the bank is not able to increase its capital adequacy ratio.

SBI model

On that account, there need not be any fear. I have assured the Board that the Government is committed to keeping its stake at no less than 51 per cent and if additional capital can be sourced by the bank, we are willing to provide additional capital in the manner that was provided to SBI,” Mr Chidambaram told reporters after meeting the top brass of the bank here.

Highlighting the recent SBI experience, where Government subscribed to its rights entitlement through bonds to the tune of about Rs 10,000 crore, Mr Chidambaram pointed out that there was now a pattern available for the Government to infuse capital into banks.

“If Government support is necessary, we are willing to give that support provided you (Central Bank of India) are able to service that support in the same manner as State Bank of India is willing to service,” he said.

The CBI’s Capital Adequacy Ratio currently stood at 10.42 per cent, which the bank is looking to raise to at least 10.78 per cent during the current fiscal.

More efficiency needed

The Finance Minister appealed to the bank’s Board and staff to use their resources more efficiently and also noted that they were not getting the maximum out of every rupee growth in business.

Mr Chidambaram also appealed to the employees to share a vision with the bank, and shed their adversarial approach.

“The Board has told me that they have the capacity to open 200 branches immediately. Once you do that, the human resource problem will be taken care of. There are opportunities and strengths of the bank that must be seized,” he said.

The Finance Minister said that the bank’s inability to deploy human resources in a manner that can sustain growth was a weakness that needed to be addressed.

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