BoM may get Rs 800 cr capital infusion this fiscal

Pune-based public sector lender Bank of Maharashtra is hopeful of receiving Rs 800 crore from the government as part of the capital infusion plan in the current fiscal.

"We have approached the government for additional capital infusion of Rs 800 crore. This is under process and we expect to get it before March, 2012," Bank of Maharashtra CMD AS Bhattacharya told PTI here.

Post-capital infusion, the capital adequacy ratio (CAR) of the bank is likely to go up to 14% from the present level of 13.35%, he added.

The Reserve Bank of India prescribes banks to have a CAR of 12% as part of its prudent risk management measures. Bhattacharya, however, noted that the bank had no plans to raise money through either through equity or bonds in the current financial year.

In the meantime, government has said that a committee had been formed to look into the matter of recapitalisation of banks.

At present, 6-7 public sector banks, including nation's largest public sector lender State Bank of India, have approached the government for capital infusion in order to boost their capital adequacy ratio, which will help in further lending to customers.

Also, implementations of Basel-III norms, which will start from 2013, require recapitalisation from the government.

Secretary in the Financial Services Department DK Mittal had earlier said that though this year budget for bank recapitalisation was Rs 6,500 crore so far, there would be a second supplement in December to infuse further capital into selected public sector banks.

Bank of Maharashtra, which has a government holding of close to 79.5%, has a total branch strength of 1,546 across the country. It has registered a 3% increase in net profit to Rs 122 crore in the first quarter of the current fiscal. Its net interest income (NII) rose by 44% to Rs 591.4 crore during this period.

Source: Business Standard