The Government has pumped in Rs6,690 crore in nine public sector banks, including SBI, Punjab National Bank, Bank of Baroda, Canara Bank, Syndicate Bank for the fiscal ended March 31, 2015 to strengthen their capital base.
The other banks are Allahabad Bank, Indian Bank, Dena Bank and Andhra Bank. Earlier in February, government had decided to infuse capital in these banks based on their performance efficiency. The Government has infused capital of Rs1,260 crore in Bank of Baroda, Rs870 crore in Punjab National Bank, Rs570 crore in Canara Bank, Rs460 crore in Syndicate Bank and Rs140 crore in Dena Bank, the banks said in separate filings to BSE today.
Country’s largest public sector lender SBI has been provided with the maximum capital infusion of Rs2,970 crore, Allahabad Bank Rs320 crore, Indian Bank Rs280 crore, and Andhra Bank Rs120 crore. Bank of Baroda said in its filing said it has informed BSE that on receipt of the funds from the government the Bank has on March 31, 2015 issued and allotted 6,44,20,471 equity shares of Rs2 each fully paid up at an issue price of Rs195.59 per equity share amounting to over Rs1,259 crore to government on preferential basis.
PNB said capital funds to the tune of Rs870 crore has been received from the government on March 31, 2015 for issue and allotment of 4,42,07,317 equity shares of face value of Rs2 each at a price of Rs196.80 per equity share on preferential basis. Banks, which are more efficient, would be rewarded with extra capital for their equity so that they can further strengthen their position, government had said earlier.
In his Budget speech last July, Finance Minister Arun Jaitley had said that to be in line with Basel-III norms there was a need to infuse Rs2.4 lakh crore as equity by 2018 in public sector banks (PSBs). Government infused capital of Rs12,000 crore in 2011-12, Rs12,517 crore in 2012-13 and Rs14,000 crore in 2013-14. Owing to higher provisioning on account of rising non-performing assets (NPA), banks are finding it tough to plough back more of its retained earnings as capital than what they did in the previous years. The S&P BSE bankex index today closed at 21,360.45 points, up 2.37 per cent from previous close.