More capital expected for the state-run banks

Fresh capital worth Rs 10,000 crore is expected for the public sector banks. Official sources said that Credit amounting to $2 billion is likely to come by November end and thereafter disbursal to individual banks will start depending on the financial status of each bank at that time.



The loans are a part of the World Bank's $14 billion crisis-related lending for India. This will help the country in faster recovery.

This credit infusion would ensure credit flow in productive sectors. It aims at enabling banks to maintain a Capital to risk weighted assets ratio (CRAR) of 12 percent in order to sustain economic growth.

The finance Ministry have received petitions from various banks regarding a share of these funds and the ministry is examining these requests.

Earlier this month, the World Bank's executive board approved a loan of $2 billion with the. The loan is intended at helping infrastructure development, small and medium enterprises and the rural economy.

World bank Country director for India said that he preferred to call it " injection of capital" to "recapitalization" since liquidity was not an issue for the Indian banking sector. He added that the sector had done "remarkably well".

Dena bank has asked the government for a capital infusion of Rs 500 crore whereas union Bank of India has approached the government for a capital infusion of Rs. 1800 crore for its expansion plans. Punjab Sind Bank has asked for Rs 700 crore during the current fiscal. Besides these, UCO Bank, Central Bank of India and Vijaya Bank - together are expected to get Rs 2,150 crore.