New Delhi : State-owned banks looking forward to the next round of capital infusion will need to fulfill a new set of criteria, including credit recovery, as the Finance Ministry has revised the recapitalisation norms.
The second tranche of capital allocation for the current fiscal would be based on cost of operations as well as recovery and quality of credit on the basis of risk weighted assets, sources said.
Only those lenders that fulfil the criteria post third quarter (October-December) results of the current fiscal will be eligible for the second round of funding, sources added. The money was allocated last fiscal on the twin principles of ensuring 7.5 per cent Common Equity Tier 1 (CET 1) at the end of the 2016 and growth capital to five major banks. The government in July had announced the first round of capital infusion of Rs 22,915 crore for 13 banks. “75 per cent of the amount (Rs 22,915 crore)…is being released now to provide liquidity support for lending operations as also to enable banks to raise funds from the market,” the Finance Ministry had said in a statement, reports PTI. “The remaining amount, to be released later, will be linked to performance with particular reference to greater efficiency, growth of both credit and deposits and reduction in the cost of operations,” it had said. The first tranche was announced with the objective to enhance their lending operations and enable them to raise more money from the market.
Out of the Rs 22,915 crore, State Bank of India (SBI) was provided Rs 7,575 crore followed by Indian Overseas Bank (Rs 3,101 crore) and Punjab National Bank (Rs 2,816 crore). The other lenders, which have got commitment of capital infusion are Bank of India (Rs 1,784 crore), Central Bank of India (Rs 1,729 crore), Syndicate Bank (Rs 1,034 crore), UCO Bank (Rs 1,033 crore), Canara Bank (Rs 997 crore), United Bank of India (Rs 810 crore), Union Bank of India (Rs 721 crore), Corporation Bank (Rs 677 crore), Dena Bank (Rs 594 crore) and Allahabad Bank (Rs 44 crore).