In keeping with Government’s commitment to provide capital support for state-owned banks, the Cabinet on Thursday approved infusion of Rs 12,517 crore into about ten banks during the current fiscal.
An in-principle approval of the Cabinet has also been accorded for need-based additional capital infusion in public sector banks (PSBs) from 2013-14 to 2018-19 so as to help them conform to the Basel-III capital rules.
Simply put, PSBs need not worry about capital support from the Government for adhering to the Basel-III capital norms.
Support till 2018-19
This could also imply that all the capital support provided by the Government in the Budgets for the 2013-14 to 2018-19 can be infused in various PSBs without obtaining further Cabinet nod
Briefing the media, Finance Minister P. Chidambaram said the capital infusion will help the banks maintain their Tier-I capital at a comfortable level, and hence remain compliant with the stricter capital adequacy norms under Basel-III.
This would also support internationally active PSBs for their national and international banking operations undertaken through their subsidiaries and associates.
Chidambaram also said that the exact amount — out of the Rs 12,517 crore — and mode of recapitalisation would be decided in consultation with the banks at the time of infusion.
In 2011-12 and 2010-11, the Centre had infused Rs 12,000 crore and Rs 20,117 crore, respectively, in various banks
For 2012-13, the Government had in last year’s Budget provided about Rs 15,000 crore for recapitalisation of various PSBs.