New and innovative ways to raise more capital for public sector banks (PSBs) may have to wait till a new Government is formed at the Centre, Finance Minister P Chidambaram has said.

“I do not think any decision can be expected in next six weeks or so. I think a lot of discussions will take place. Maybe some papers to be written. 

But for decision you will have to wait for Government to be formed. That is the appropriate way to go about that”, Chidambaram said here on Friday.

Currently, policymakers are looking at multiple innovative steps to bolster the capital of public sector banks, given that Government support for capital infusion may not be adequate in the coming years.  

Besides allowing banks to issue perpetual bonds to pension funds and insurance companies, policymakers are also looking at rights issue to minority shareholders. 

“There was some discussion today about non voting shares. I think time has come to look for new and innovative ways to raise more capitals for the banks”, he said. 

RAJAN VIEW

RBI Governor, Raghuram Rajan said that raising capital through innovative instruments should be seen as a process and not a one time decision.

“I think it is important to create environment for investors willing to buy more capital. We also have to give more confidence about adequate returns. So, it is a process which will work over time. 

Finance Minister mentioned different forms of capital raising that could take place, so all these will be explored and we will proceed along these paths over next few years. We are talking about years rather than months of steady process of raising capital”, Rajan said. 

srivats.kr@thehindu.co.in

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