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Indian Govt approves Infusion of Capital Worth Rs.6211 Crore in Five Public Sector Banks


June 12, 2010: As part of the budgetary promise to provide a sum of Rs.16,500 crore to ensure that the Public Sector Banks are able to attain a minimum 8 per cent Tier-I capital by March 31, 2011, the Government today approved infusion of Rs. 6211 crore in five Public Sector Banks. These banks will undertake the necessary regulatory formalities to obtain clearances from concerned agencies for infusion of this capital.

The Government will infuse-
1. Rs. 590 crore in the Bank of Maharashtra through the Perpetual Non-Cumulative Preference Shares (PNCPS) route.

2. Rs. 2016 crore in Central Bank of India by participating in the Rights Issue.

3. Rs. 3119 crore in IDBI Bank by way of preferential placement of equity.

4. Rs. 375 crore in UCO Bank through the PNCPS route.

5. Rs. 111 crore in the Union Bank of India through the PNCPS.



These Banks would be able to leverage this capital and lend an additional approximate amount of Rs.77,637 crore to the productive sectors of the economy giving a push to all round economic activity besides paying additional dividends and tax revenues to the Government.

The Government has stipulated certain conditions as part of this capital infusion and would be closely watching the performance of these banks so that they continue to maintain the desired capital adequacy and achieve those conditions.

It may be recalled that the Government had infused Rs. 1500 crore in four PSBs during the current financial year in the month of May, 2010. Before that, Rs. 1200 crore had been infused in three PSBs during March, 2010.

With the current infusion of Rs. 6211 crore, the Government would be infusing a total sum of Rs. 8911 crore during the last four months, the highest capital infusion in the Public Sector Banks in recent times.



In the past also ,during the year 2008-09 also, the Union Cabinet, in its meeting held on 11th February, 2009 and 30th March, 2009 had approved the proposals to infuse total capital funds in four banks namely Central Bank of India, Vijaya Bank, UCO Bank and United Bank of India by subscribing to their innovative Tier I capital instruments. Accordingly a sum of Rs. 1,900 crore was then infused in these four nationalized banks (Central Bank of India Rs. 700 crore, UCO Bank Rs. 450 crore, Vijaya Bank Rs. 500 crore and United Bank of India Rs. 250 crore).

Indian Govt to infuse Rs.15,000 crore capital funds in Public Sector Banks in 2010-11


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