NEW DELHI:Seven public sector banks (PSBs) will soon hit the markets to raise capital with the Ministry of Finance giving its nod.
PSBs need Rs 2.40 lakh crore capital by 2018 to meet global Basel III norms. The government had infused Rs 14,000 crore last fiscal in 14 PSBs. This fiscal, it has earmarked Rs 6,990 crore in 9 PSBs of which SBI is entitled to get Rs 2,970 crore, followed by BoB Rs 1,260 crore, PNB Rs 870 crore and Canara Bank Rs 570 crore. For the next fiscal, Rs 7,940 crore has been earmarked.
The government’s decision to reduce its shareholding in PSBs to 52 per cent would also give banks headroom to raise capital from the market.
“The government doesn’t have space to give Rs 20,000 crore or Rs 25,000 crore...if banks require further capital they have other means to raise capital including from raising capital from market,” said Hasmukh Adhia, Financial Services secretary.
He added that banks were adequately capitalised for the moment and there was no immediate need to raise funds from the market.
In December, 2014, the government had allowed PSU banks to raise funds from markets by diluting government holding to 52 per cent.
Currently, government holds between 56 and 84 per cent in 27 state-run banks, of which it has majority holding in 22 banks. In the remaining 5, SBI holds majority stake.