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Govt to Infuse Rs.22,915 cr to Recapitalise 13 PSU Banks

Published on Tuesday, July 19, 2016
Dear Readers,
The Government of India has allocated Rs 22,915 crore to recapitalise 13 Public Sector Banks (PSBs), including the biggest lender State Bank of India in the current fiscal. This is in line with its “Indradhanush” initiative, aimed at restoring banking sector health.

Allocation Break-up as Released by Ministry of Finance

Sl No
Name of the Bank
Amount (in Rs crore)
Allahabad Bank 44
Bank of India 1,784
Canara Bank 997
Central Bank of India 1,729
Corporation Bank 677
Dena Bank 594
Indian Overseas Bank 3,101
Punjab National Bank 2,816
State Bank of India 7,575
Syndicate bank 1,034
UCO Bank 1,033
Union Bank of India 721
United Bank of India 810

Important Points:

1)  A total of 13 PSBs will be part of this capital infusion drive.

2) The sum is about 92% of the budgeted provision of Rs 25,000 crore.

3) The highest sum of Rs 7,575 crore is being released for SBI, followed by Rs 3,101 crore for Indian Overseas Bank and Rs 2,816 crore for Punjab National Bank and the least for Allahabad Bank at Rs 44 crore.

4) The capital infusion exercise for the current fiscal is based on an assessment of need as assessed from the compounded annual growth rate (CAGR) of credit growth for the last five years, banks’ own projections of credit growth and an objective assessment of the potential for growth of each PSBs.

5) The amount released is 75% of that collected for each bank is being released now to provide liquidity support for lending operations as also to enable banks to raise funds from the market and the remaining amount, to be released later is linked to performance, with particular reference to greater efficiency, growth of both credit and deposits and reduction in the cost of operations.

6) The 13 PSU banks are to get Rs. 25,000 crore each in 2015-16 and 2016-17 fiscal. Besides, Rs. 10,000 crore each would be infused in 2017-18 and 2018-19

7) The government will release the remaining amount at a later date but that will be linked to performance parameters like greater efficiency, growth of both credit and deposits and reduction in the cost of operations.

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