World bank to lend Rs15,000 crore for PSU banks: report

The World Bank is likely to approve by the end of this month a proposal to provide $3 billion (Rs15,000 crore) to the government to recapitalise public sector banks. While $2 billion from this is expected to be disbursed by December or so, the remaining amount is expected at the end of next year, according to a report.

The government had proposed an expenditure Rs18,000 crore to replenish the capital of state-owned banks during the current fiscal year in a bid to boost their balance sheets in line with international regulatory standards and help them lend more money to companies and individuals.

Barring a handful like the State Bank of India and Punjab National Bank, most public sector undertaking (PSU) banks are likely to get a share of the capitalisation funds, according to a Hindustan Times report quoting an unnamed senior government official.

''We are planning to recapitalise most of the banks except just three or four,'' the official said. Three government-owned banks -UCO Bank, Central Bank of India and Vijaya Bank - have already got Rs3,800 crore.

The fund would help these banks to shore up their capital adequacy ratio (CAR) while helping them to adhere to the stringent Basel II norms. Several banks including the United Bank of India and Punjab and Sind Bank also have the option of raising additional funds by tapping the capital market.