Initiating its Rs 14,000 crore capital infusion programme for state-owned banks, the Finance Ministry on Wednesday decided to pump in Rs 2,000 crore in the country’s biggest lender State Bank of India (SBI) and Rs 1,800 crore each in IDBI Bank and Central Bank of India (CBI).
All the public sector banks with the exception of Chennai-based Indian Bank will be getting funds ranging between Rs 100 crore to Rs 2,000 crore. Indian Bank has indicated to the Finance Ministry that it does not require fresh capital. “SBI is getting Rs 2,000 crore. Bigger banks are getting more,” Financial Services Secretary Rajiv Takru said.
Besides the capital support from the government, he said, public sector banks have the headroom to raise Rs 10,000 crore from the market though rights issue, Qualified Institutional Placement (QIP) or follow-on public offer without diluting existing Government stake. This money has been given to enhance equity capital not for any other purpose, he said, adding, “for the moment this is good enough to see them through.”
On Tuesday, Finance Minister P Chidambaram had more than adequately made clear that the government would be allocating Rs 14,000 crore through Budget, Takru said. “Other than this, banks board could take decisions on how they want to raise additional equity. They have there options, they have rights issue, they have QIP option they have FPO option. But in any case we have made amply clear that they could proportionately tap the outside market, and increase the their equity. The banks would be able to generate Rs 10,000 crore,” the Financial Services Secretary said.
Other banks like Indian Overseas Bank would be getting Rs 1,200 crore while Punjab National Bank would get Rs 500 crore. During the current fiscal, Bank of Baroda will get Rs 550 crore, Canara Bank Rs 500 crore, Allahabad Bank Rs 400 crore, Bank of Maharashtra Rs 800 crore and Dena Bank Rs 700 crore. Besides, Bank of India will get Rs 1,000 crore, Corporation Bank Rs 450 crore, Union Bank of India Rs 500 crore, United Bank of India Rs 700 crore, Oriental Bank of Commerce Rs 150 crore and Punjab and Sind Bank Rs 100 crore. The second round of capital infusion may come in the fourth quarter of the current fiscal depending upon banks’ requirements.