The Cabinet has given in-principle nod for providing need based re-capitalisation of banks till 2018-19 for ensuring compliance with the Basel III capital adequacy norms
New Delhi: Seeking to enhance lending by banks and help them meet capital adequacy norms, the government today approved infusion of Rs12,517 crore in around 10 state-owned banks over the next three months, reports PTI.
The Cabinet has also given in-principle nod for providing need based re-capitalisation of banks till 2018-19 for ensuring compliance with the Basel III capital adequacy norms.
“Pursuant to the Budget announcement made by the finance minister on 16 March 2012, we are infusing additional capital into the public sector banks. We will infuse before the end of this fiscal year a sum of Rs12,517 crore,” finance minister P Chidambaram said after the Cabinet meeting.
“We think about 9-10 banks will get the money... this will enable the banks to maintain the Tier I CRAR (capital to risk-weighted assets ratio) at a comfortable level and will be compliant to stricter capital adequacy norms of Basel III whenever Basel III is implemented,” he said.
The name of the banks, the amount for each bank and terms of the conditions will be decided in consultation with them at the time of infusion, the minister added.
The government infused about Rs20,117 crore in public sector banks during 2010-11, and Rs12,000 crore in 2011-12.
The Cabinet also gave in-principle approval for need- based additional capital infusion in PSBs (public sector banks) from 2013-14 to 2018 -19 for ensuring compliance with Basel-III—global banking norms on capital adequacy to minimise financial risk.
It will cater to the credit needs of productive sectors of the economy as well as help withstand the impact of stress in the economy, Mr Chidambaram said.
This will also support national and international banking operations of PSBs and boost the confidence of investors as well as the market sentiment, he added.
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