Govt may provide funds to some public sector banks from Rs 20k crore fund in December quarter

The government had refrained from committing any funds in the FY21 budget for PSBs.

In order for some public sector banks (PSBs) to meet regulatory capital requirements, the government may infuse funds, if the need arises, in the October-December quarter itself from the Rs 20,000 crore fund approved by the Parliament in recently concluded session, PTI reported citing sources. Parliament had approved the fund for capital support to PSBs — part of the first batch of Supplementary Demands for Grants for FY21. It had sought additional spending worth Rs 2.35 lakh crore primarily for Covid-related expenses.

The sources added that the result for the quarter ending September will suggest which bank will likely need regulatory capital and accordingly recapitalisation bonds would be issued to them. State-owned banks, on the other hand, already have the approval of shareholders for securing funds via a mix of bonds and equity in the existing financial year. Importantly, the government had refrained from committing any funds in the FY21 budget for PSBs hoping that they will secure funds from the market as per the need. The government had put Rs 70,000 crore into public banks in FY20 to enhance credit to give strong economic impetus.

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Punjab National Bank had received Rs 16,091 crore, Union Bank of India had got Rs 11,768 crore, Canara Bank had got Rs 6,571 crore and Indian Bank had received Rs 2,534 crore in the last financial year. Moreover, Andhra Bank had got Rs 200 crore, Allahabad Bank had received Rs 2,153 crore and United Bank of India had Rs 1,666 crore. These three banks have been merged with other PSBs.

Further, Bank of Baroda had a capital infusion of Rs 7,000 crore, Rs 4,360 crore was raised by Indian Overseas Bank, Rs 2,142 crore was secured by UCO Bank, Punjab & Sind Bank had got Rs 787 crore, Central Bank of India had received Rs 3,353 crore and LIC-controlled IDBI Bank had secured additional capital of Rs 4,557 crore.

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