Expressing the government’s commitment to recapitalisation of State Bank of India (SBI), Finance Minister Mr Pranab Mukherjee on Sunday said that funds would be provided to the PSU lender to enable it to achieve compliance with capital adequacy ratio (CAR) norms.
“We are going to infuse fresh capital in SBI so that Tier-1 (equity) capital becomes at least 8 per cent,” he told reporters during a stopover here on his way back from Paris to New Delhi. The minister was in the French capital to attend the G-20 meeting of Finance Ministers and Central Bank Governors.
When asked whether the government would provide Rs 12,000 crore, as is being demanded by SBI, Mr Mukherjee said, “This (requirement) is over a period of time and not in one year...I am going to provide additional capital to SBI.”
Recapitalisation of banks, the minister said, was a continuing process and the government will continue to provide funds to PSU lenders through the Budget to ensure that they can meet solvency requirements.
As earlier indicated by Financial Services Secretary Mr D K Mittal, the government will inject Rs 3,000-4000 crore into SBI during the current fiscal to help it achieve 8 per cent capital adequacy ratio (CAR).
Moody’s had recently downgraded the credit rating of SBI, citing inadequate capital and poor asset quality as reasons.
Following the downgrade, major private sector lenders like ICICI Bank, HDFC Bank and Axis Bank now have a better standing than SBI in terms of their credit rating.