Bank of Maharashtra to be recapitalised this fiscal

Public sector lender Bank of Maharashtra (BoM) today said it expected a capital infusion by the government this fiscal as it had received a letter from the Finance Ministry in this regard.

"We have received a letter from the government stating that our request for fund infusion is under active consideration and we should be ready for the proposed infusion," the Pune-headquartered bank's Chairman and Managing Director AS Bhattacharya said.

However, the quantum of the proposed infusion is not known, he said. The bank has been looking at a capital infusion of around Rs 860 crore by the government.

At present, six to seven public sector banks, including the nation's largest lender, State Bank of India, have approached the government for a capital infusion to shore up their capital adequacy ratio, which will help in further lending to customers.

Last week, Bank of Baroda said it had been assured of Rs 775 crore recapitalisation through preferential share allotment. Yesterday, Union Bank of India had said it would get a capital infusion of Rs 280 crore in the current quarter.

However, there is no final word on a request from the nation's largest lender SBI for the same, though it has been pending for over a year. The bank is expecting a capital infusion of some Rs 4,000 crore this fiscal.

Implementation of Basel-III banking norms, which will be enforced from 2013, requires recapitalisation of the state-run banks by the government.

Earlier, Financial Services Secretary DK Mittal had said though this year's budget for bank recapitalisation was only Rs 6,500 crore, there would be a second supplementary budget after December to infuse capital into select public sector banks.

Referring to capital adequacy ratio, sources in the industry said that post-capital infusion, the combined capital adequacy ratio of BoM stood at 11.88% as of the September quarter. The government holds a 79.24% stake in the bank.

Source: Business Standard