Third tranche of state bank fund infusion soon

New Delhi: The government will soon conduct the third tranche of recapitalisation for public sector banks in the current financial year started April, a senior finance ministry official said on Thursday. “We will soon announce the third tranche of (public sector) bank recapitalisation. The government will take a call on the bank-wise quantum of recapitalisation after studying the financial results of July-September,” the official said.

According to media reports, in the quarter ended June, the loss of all public-sector banks have shrunk by around 74 per cent on year.  So far in the current financial year, the government has infused capital into seven state-owned banks, including Punjab National Bank, Corporation Bank, Central Bank of India, and Allahabad Bank, through recapitalisation bonds worth Rs 19,850 crore.

Recently, the government issued recapitalisation bonds worth Rs 728 crore to Syndicate Bank. The Budget for 2018-19 projected issuance of bonds worth Rs 65,000 crore to infuse fund into state-owned banks. In 2017-18, the government had infused capital worth Rs 88,100 crore into public sector banks, of which Rs 80,000 crore were issued though recapitalisation bonds.

In the last financial year, the government announced a plan under which it would infuse Rs 2.11 lakh crore into public sector banks. The finance ministry has also been looking at the feasibility of frontloading its capital infusion for the current financial year in a bid to help the struggling public sector banks, which have been put under the Reserve Bank of India’s prompt corrective action framework.

Almost all the 21 public sector banks, especially 11 banks that are under the prompt corrective action (PCA) framework, have sought capital from the government to boost lending and meet regulatory requirements.

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