Four state-run banks--Vijaya Bank, Central Bank of India, UCO Bank and United Bank of India --are likely to get Rs 1,500 crore as part of their recapitalisation package soon, according to sources.
The fund infusion will enable these banks to maintain comfortable level of capital to risk-weighted asset ratio for supporting credit requirement of the productive sectors.
Of the total, Vijaya Bank will get Rs 700 crore, UCO Bank Rs 300 crore, Central Bank and United Bank of India Rs 250 crore each, sources said, adding the government has already made a provision for subscription to tier-I instrument for capitalisation of these bank in the budget.
During the past fiscal, the government had provided Rs 1,200-crore capital support to Central Bank of India, UCO Bank and United Bank of India to meet their capital requirement.
UCO Bank and Central Bank of India got Rs 450 crore each while United Bank of India, which recently got listed, received a financial assistance of Rs 300 crore.
The government plans to provide financial support of Rs 15,000 crore to the public sector banks during the current fiscal. The Cabinet has already approved capital infusion plan that will increase the lending capacity of the banks by Rs 1.85 lakh crore.
The exact amount, the mode of capitalisation and other terms would be decided in consultation with the banks at the time of infusion.
The Rs 15,000-crore fund infusion for tier I capital instruments of PSBs would enable them to expand their credit growth by about Rs 1,85,000 crore. This additional availability of credit is likely to benefit employment oriented sectors, especially agriculture, micro and small enterprises and entrepreneurs.