Public sector banks can raise funds from market: Sinha

With capital needs for public sector banks pegged at Rs 2.39 lakh crore over the next four years, the Finance Ministry today said they have been allowed to raise funds from market to meet capital requirements.
In written replies in the Lok Sabha, Minister of State for Finance Jayant Sinha said the government is conscious of the need to strengthen the PSBs in India.
"The government is making an assessment of capital needs of PSBs, however earlier assessment of capital requirement of PSBs was Rs 2,39,720 crore during 2015-19.
"PSBs have sent their projected capital requirement to the government for the next four years," he said.

Last year, the government had allowed PSBs to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52 per cent.
Sinha said various options are being examined with a view to arriving at the "most comprehensive solution" which caters to the need for re-capitalisation as well as making banks more efficient while retaining the public sector character of the banks.

Sinha said the PSBs have been allowed to raise from market by diluting government holding to 52 per cent in phases to meet Basel III capital adequacy norms.
"The government has taken a decision to allow PSBs to raise capital from market through follow-on public offer or qualified institutional placement and in the process bringing down the government's shareholding up to 52 per cent, as to decrease bank's reliance on government infusion," he said.

Given the present level of government's shareholding in these banks which ranges from 57 to 85 per cent, Sinha said, "there is substantial room for raising equity from the market without diluting the public sector character".