PSBs to get capital aid from Rs 20k cr fund: Finance Ministry

Parliament approved Rs 20,000 cr for PSB capital infusion as part of the first batch of Supplementary Demands for Grants for 2020-21 which sought additional spending of a record Rs 2.35 trillion primarily to meet expenses for combating the Covid-19 pandemic.

 The fund infusion would be for meeting regulatory capital needs if the need arises in Oct-Dec quarter, sources said. The second quarter result will give an idea as to which bank may require regulatory capital and accordingly recapitalisation bonds would be issued to them, sources said. Besides, state-owned banks already have shareholders’ approval for raising capital through a mix of equity and bonds during the current fiscal.

 It is to be noted the Centre refrained from committing any capital in the Budget 2020-21 for PSBs, hoping that lenders will raise funds from the market depending on the requirement. In 2019-20, it infused Rs 70,000 crore into PSBs to boost credit for a strong impetus to the economy. In the last fiscal, PNB got Rs 16,091 cr, Union Bank of India received Rs 11,768 cr while Canara Bank and Indian Bank got Rs 6,571 cr and Rs 2,534 cr, respectively.

 Allahabad Bank got Rs 2,153 cr, United Bank of India got Rs 1,666 cr and Andhra Bank received Rs 200 cr. These three lenders have been merged with various PSBs. Besides, Bank of Baroda got a capital infusion of Rs 7,000 cr, IOB got Rs 4,360 cr and UCO Bank got Rs 2,142 cr. Punjab & Sind Bank received Rs 787 crore and Central Bank of India got Rs 3,353 crore.