Govt announces capital infusion of Rs6,990 crore in public sector banks
New Delhi: The government on Saturday announced a capital infusion of Rs.6990 crore in nine state run banks, including State Bank of India (SBI) and Punjab National Bank (PNB), but based on new efficiency parameters such as return on assets and return on equity.
In a statement, the finance ministry said, “This year, the Government of India has adopted a new criteria in which the banks which are more efficient would only be rewarded with extra capital for their equity so that they can further strengthen their position."
The government had budgeted to infuse more than Rs.11,000 crore as capital in the current financial year. It is not clear if the government plans to infuse capital in the other state run banks that have not performed well on the listed parameters.
While State Bank of India will get Rs.2,970 crore as capital in the current fiscal, Bank of Baroda will get Rs.1,260 crore, Punjab National Bank Rs.870 crore, Canara Bank Rs.570 crore, Syndicate Bank Rs.460 crore, Allahabad Bank Rs.320 crore, Indian Bank Rs.280 crore, Dena Bank Rs.140 crore and Andhra Bank Rs.120 crore.
Though the government has specified its intention to bring down its stake in state run banks to 52% to give them more avenues to raise funds, most banks are expected to approach the market to raise capital only next fiscal.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.