Government to infuse Rs12,517-crore capital in PSU banks this fiscal

The government today approved a proposal to inject fresh capital of Rs12,517 crore in public sector banks during the current fiscal to help them maintain their Tier-1 capital at comfortable levels and enhance lending activity.

The union cabinet also gave ''in principle'' approval for need-based additional capital infusion in PSBs from the year 2013-14 to 2018-19 for ensuring compliance to capital adequacy norms under Basel- III.

The capital infusion programme will help about 9-10 public sector banks remain compliant with the stricter capital adequacy norms under Basel-III as well as to support internationally active PSBs for their national and international banking operations, finance minister P Chidambaram said after the cabinet meeting.

The additional capital funds while ensuring compliance to the regulatory norms on capital adequacy, will also help the state-owned banks to cater to the credit needs of productive sectors of the economy as also withstand the impact of stress in the economy.

This will also support national and international banking operations of PSBs and will boost the confidence of investors and market sentiment.

It would enable PSU banks to expand credit and cater to the credit needs of the economy, benefiting employment oriented sectors, especially agriculture, micro and small enterprises, export, entrepreneurs etc in promotion of their economic activities which would, in turn, contribute substantially to the growth of the economy, the minister said.