The report said that in the interim budget, government provided Rs 11,200 for the public sector banks. There could be additional provision of...
Rs 7,000 crore for these banks when government tables regular budget for 2014-15 in June-July.
The Department of Financial Services is likely to request for additional capital infusion in regular budget as the PSU banks require more capital than what has been allocated in the interim budget.
The Finance Minister had after the interim budget indicated that the government will provide more funds if it mobilises higher resources.
"What we have provided is what we have budgeted now. This is an Interim Budget. In regular budget you will get a full picture what government can provide as additional capital," the finance minister had maintained.
"As you know, government has provided Rs. 11,200 crore for next year. This is not adequate, but that's the budget estimate... As we find more money, we should infuse more into the public sector banks," Chidambaram had said.
The government infused Rs. 14,000 crore in public sector banks during the current financial year ending March 31 of which the State Bank of India got Rs. 2,000 crore while Indian Overseas Bank received Rs. 1,200 crore. In view of the Basel III or global prudential banking norms, all banks have been planning to shore up their Tier 1 capital.
As per RBI directive, Indian lenders will require an additional capital of Rs. 5 lakh crore to meet the new global banking norms - Basel III. The government owns 70 percent stake in the banking system and it will have to pump in Rs. 90,000 crore equity to retain its shareholding in the public sector banks (PSBs).
Of the total Rs. 5 lakh crore, equity capital will be of the order of Rs. 1.75 lakh crore and Rs. 3.25 lakh crore as non-equity. The RBI recently extended the deadline for Basel III implementation in a phased manner by banks by one year March 2019. The government infused Rs. 20,117 crore in public sector banks during 2010-11, and Rs. 12,000 crore in 2011-12.