Government of India allocated Rs14,000 Cr as capital infusion for Public Sector Banks. SBI to get Rs 2,000 cr capital, IDBI Bank Rs 1,800 cr.
The Government of India has allocated Rs. 14,000 Crore as Capital Infusion for 20 public sector banks. The capital infusion is done with the twin objective of adequately meeting the credit requirement of the productive sectors of the economy as well as to maintain regulatory capital adequacy ratios.
The Ministry of Finance finalized bank-wise allocation on October 23, 2013. Government allocated Rs 2,000 crore as capital infusion for State Bank of India while IDBI Bank & Central Bank of India will get Rs 1,800 crore and Indian Oberseas Bank will get Rs. 1200 Crore.
Experts are hoping that this capital infusion will help banks to raise more money from the market. Banks can raise Rs 10,000 crore from markets against the Government’s Rs 14,000 crore infusion.
The capital infusion will ensure that banks have 8 per cent Tier-1 capital (which is core capital consisting equity capital and disclosed reserves) by the end of the current fiscal year.
The Government will infuse capital through preferential mode of allotment. Banks can allot preferential capital to the Government. There is a provision in the banking laws used last year also. The Government had infused Rs 12,517 crore during 2012-13.