Finance Ministry may finalise additional fund needs for banks in 3 months.

New Delhi: The Finance Ministry is likely to finalise additional capital requirement, over and above budget provision of about Rs 8,000 crore, for public sector banks in the next three months.

The exercise of getting representations from individual banks for additional capital requirement would be completed by first week of July. Subsequently, the Department of Financial Services would make fair assessment of fund requirement, sources said.

Aggregation of data and compilation would take some time. Final picture on additional capital requirement is expected to emerge in 2-3 months, sources added.

Finance Minister Arun Jaitley on Friday had promised more capital infusion into public sector banks, saying there is “merit” in their demand for more funds over and above what was provided in the Budget.
“Banks have made a strong case for additional capital… And over the next few months, this is something the government is going to seriously look at,” Jaitley had said.

The issue of additional capital requirement was also flagged by the Reserve Bank in view of mounting bad loans and support growth.

The government has earmarked Rs 7,940 crore in the Budget for recapitalisation of PSU banks for the current fiscal.

The Finance Ministry has already initiated the process of assessment with meeting heads of three banks — UCO Bank, United Bank of India and Allahabad Bank — on June 12.

The capital assessment meeting of the first batch was attended by Minister of State for Finance Jayant Sinha and Financial Services Secretary Hasmukh Adhia from the Finance Ministry side.

The capital infusion requirement would be discussed with Punjab National Bank, Punjab & Sindh Bank and Oriental Bank of Commerce on June 18 here.

It would be followed by the meeting in Mumbai on June 24, 25 where State Bank of India, Union Bank of India, IDBI Bank, Central Bank of India, Bank of India, Bank of Baroda, Dena Bank and Bank of Maharashtra would make their presentations.

Presentation by Andhra Bank, Indian Overseas Bank, Corporation Bank, Canara Bank, Syndicate Bank and Vijaya Bank would be made on July 3 in Bengaluru.

During the quarterly review of Public Sector Banks’ performance held on March 11, it was discussed that the banks should find out their own resources for raising capital and also work out their own plan for raising capital from market.

Capital requirement may be for the existing business growth and some for meeting the new credit requirement.

 

[Source “PTI”]