New Delhi, Oct 29 (PTI) The dilution of government equityto 52 per cent in state-owned banks under the recapitalisationplan can fetch valuation much higher than the estimatedpotential of Rs 58,000 crore, says a report.
"As PSU banks have been given over-weightage followingthe government announcement of capital infusion, theirvaluations have already gone up.
"...This would surely mean, that if the banks are able toencash the sweet spot, they can easily raise much more than Rs58,000 crore," industry body Assocham said in a report today.
It is said to the extent, the market is ready to give apremium on the PSU banks, notwithstanding some profit-taking,post October 24, the government can then tweak the projectsbonds and reduce their size below Rs 1,35,000 crore, bringingdown the interest burden on the budget and avert pressure onthe fiscal, according to the report.
Besides, the chamber also said that once the uptick inlending resumes, there would be consequent advantages by wayof higher economic growth and tax buoyancy.
Last week, the government unveiled an unprecedented Rs2.11 lakh crore two-year road map for strengthening NPA-hitpublic sector banks, which includes re-capitalisation bonds,budgetary support, and equity dilution.
The programme entails mobilisation of capital, withmaximum allocation in the current year, to the tune of aboutRs 2,11,000 crore over the next two years, through budgetaryprovisions of Rs 18,139 crore, and recapitalisation bonds tothe tune of Rs 1.35 lakh crore.
The balance will be raised by banks from the market bydiluting government equity. The government's equity dilutionwill help banks to raise about Rs 58,000 crore. The governmentequity, as per the current policy, can come down to 52 percent in state-owned banks. PTI BKSBAL.
This is unedited, unformatted feed from the Press Trust of India wire.
