Finance

PSU banks to soon receive Rs 42,000 crore as part of government's recapitalisation plan, says report

Updated : November 27, 2018 09:48 AM IST

However, big banks such as State Bank of India (SBI) and Punjab National Bank (PNB) have been excluded from the exercise, the report said.

PSU banks to soon receive Rs 42,000 crore as part of government's recapitalisation plan, says report

Public sector banks will receive Rs 42,000 crore over the next four months in capital infusion as part of the government's recapitalisation plan announced last year, the Mint reported, citing a senior official from the finance ministry.

“We will infuse the next tranche of recapitalisation by mid-December. Close to ₹42,000 crore remain to be infused as capital in public sector banks in the current financial year,” an official was quoted as saying.

However, big banks such as State Bank of India (SBI) and Punjab National Bank (PNB) have been excluded from the exercise, said the Mint report.

The development comes at a time when the Reserve Bank in its last board meeting relaxed rules relating to implementation of Basel III norms which led to the banks receiving an additional one year to meet the capital conservation buffer, the report said. The deadline for the same ends on March 31, 2020.

“The rule is designed to ensure that banks build up capital buffers at times when credit is growing, which can be drawn down when losses are incurred during a stressed period. The capital conservation buffer in the form of common equity is being uniformly phased over a period of four years, or 0.625 percent a year, starting 1 January 2016,” the report said.

The total allocation under the plan is Rs 211,000 crore, of which Rs 135,000 crore was from the sale of recapitalisation bonds and the remaining Rs 76,000 crore was through budgetary allocation and fundraising from the market, the report added.

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