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Government may rework PSBs recapitalisation estimates to nearly Rs 1 lakh crore

Updated : December 27, 2018 11:46 AM IST

The ministry of finance on Tuesday said it may rework FY19 public sector banks (PSB) recapitalisation estimates between Rs 80,000 crore and Rs 1 lakh crore from Rs 42,000 crore to improve the financial health of lenders, government sources privy to the developments told CNBC-TV18.

Additional FY19 PSBs recapitalisation was earlier estimated at around Rs 20,000 crore.

Further, the government is likely to issue the second tranche of Rs 42,000 crore recapitalisation bonds to PSBs in December, said people familiar with the matter.

This year the government pumped Rs 11,336 crore in five PSBs -- PNB, Allahabad Bank, Indian Overseas Bank, Andhra Bank and Corporation Bank -- to improve their financial health.

State-owned banks will need less capital to meet their capital adequacy norms, as the RBI last week decided to defer the deadline for them to meet the global norms or Basel-III requirement by a year till March 2020.

The RBI Board last week, while deciding to retain the capital adequacy requirement for banks at 9 percent, agreed to extend the transition period for implementing the last tranche of 0.625 percent under the capital conservation buffer (CCB) by one year — up to March 31, 2020. Rating agency Moody's Investors Service had last week said the decision of the RBI board to extend the timeline for banks to implement Basel III guidelines is 'credit negative' for PSBs.

The government announced the Rs 2.11-lakh crore capital infusion programme in October last year. According to the plan, the PSBs were to get Rs 1.35 lakh crore through recapitalisation bonds, and the balance Rs 58,000 crore through the raising of capital from the market. Out of the Rs 1.35 lakh crore, the government has already infused about Rs 82,000 crore through the bonds.
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