"This year, the government of...
India has adopted a new criteria in which the banks which are more efficient would only be rewarded with extra capital for their equity so that they can further strengthen their position," said a press release.
Thus, the State Bank of India will get Rs.2,970 crore; Bank of Baroda Rs.1,260 crore; Punjab National Bank Rs.870 crore; Canara Bank Rs.570 crore; Syndicate Bank Rs.460 crore; Allahabad Bank Rs.320 crore; Indian Bank Rs.280 crore; Dena Bank Rs.140 crore and Andhra Bank will get Rs.120 crore.
This is the first installment of capital infusion from the government, which had allocated Rs.11,200 crore in the 2014-15 budget for the purpose. Indian PSBs require equity capital of Rs.2.4 lakh crore by 2018 to meet global Basel III norms on capital adequacy.
The methodology for arriving at the amount to be infused in these banks has been based on efficiency parameters, the statement said.
"First of all, weighted average of return on assets (ROA) for all PSBs for last three years put together was arrived at and all those who were above the average have been considered.
"The second parameter that has been used is return on equity (ROE) for these banks for the last financial year. Those who have performed better than average have been rewarded," it added.
Saying that the Centre is conscious of the fact that a lot of reforms are required in the PSBs, it arranged for the recent two-day retreat of chairman and managing directors of banks and financial institutions called 'Gyan Sangam' at Pune Jan 1 and 2, 2015.
"One of the general principle adopted during the Retreat was that efficient banks should be encouraged. For the last few years, government of India has been infusing capital to those banks whose equity erosion has taken place," it said.
Therefore, this year, the government has adopted this new criteria in which the banks which are more efficient would only be rewarded with extra capital for their equity so that they can further strengthen their position, it added.