PSU Banks to get capital support of Rs 6,000 cr in FY12

NEW DELHI: The government today said it will provide capital support to the tune of Rs 6,000 crore to public sector banks during the next fiscal to strengthen their capital base.

"I propose to provide a sum of Rs 6,000 crore for the year 2011-12 to enable Public Sector Banks to maintain a minimum Tier I Capital to Risk Weighted Asset Ratio (CRAR) at 8 per cent," Finance Minister Pranab Mukherjee today said in Lok Sabha while presenting 2011-12 Budget.

He said, during the year 2010-11, the government is providing a sum of Rs 20,157 crore for infusion in public sector banks to maintain Tier I CRAR at 8 per cent and increase the government equity in some banks to 58 per cent.

As part of recapitalisation exercise, the government approved infusion of Rs 6,211 crore into five banks in June 2010. Banks, which had got capital support from the government in the first tranche included Union Bank of India , Bank of Maharashtra , IDBI Bank , UCO Bank and Central Bank India.

The second tranche, announced earlier this month, also provided capital support for several public sector banks, including Corporation Bank , UCO Bank, Indian Overseas Bank and United Bank of India .

In addition, the Finance Minister also announced the recapitalisation of Regional Rural Banks (RRBs)

As a part of financial strengthening of Regional Rural Banks, an amount of Rs 350 crore was given to these banks during this year.

"I propose to provide Rs 500 crore during 2011-12 to enable them maintain a CRAR of at least 9 per cent as on March 31, 2012," he said.

Source: EconomicTimes