The government would decide the second installment of financial assistance after going through Q2 (July-September) financial performance of banks wherein it would be clear which institutions lack how much capital fund.
A decision on financial assistance taken by the Finance Ministry, which has already approved more than 6,200 crore as Tier I capital to 5 public sector banks including Union Bank of India, is expected by the end of November.
The next tranche would come only after second quarter results of the banks are announced, official sources said.
By that time, it would be clear how many banks would require how much funds for shoring up their Tier I capital over 8 per cent, sources said.
Finance Minister Pranab Mukherjee in his Budget speech had announced that the government planned a capital support of Rs 15,000 crore to public sector banks during the current fiscal to ensure that these entities are able to attain a minimum 8 per cent tier-I capital by March 31, 2011.
Following which the Union Cabinet also approved capital infusion plan, which will help banks to increase the lending capacity of state-run banks by Rs 1.85 lakh crore.
This additional credit availability, as per the cabinet decision, is likely to benefit employment-oriented sectors, especially agriculture, micro and small enterprises and entrepreneurs.
Earlier this month, the government approved infusion of Rs 6,211 crore into five public sector banks, a move which will help in lending an additional Rs 77,637 crore to various sectors of the economy.
The banks, which got capital support from the government included Union Bank of India, Bank of Maharashtra, IDBI Bank, UCO Bank and Central Bank India.
Of the total IDBI Bank will get Rs 3,119 crore, followed by Central Bank of India Rs 2,016 crore, Bank of Maharashtra Rs 590 crore, UCO Bank Rs 375 crore and Union Bank of India Rs 111 crore.
The capital infusion in IDBI Bank will be through the preferential placement of equity, while in Central Bank of India it will be through participation in rights issue.
Three other banks namely, Union Bank of India, Bank of Maharashtra and UCO Bank would get capital by way of perpetual non-cumulative preference shares (PNCPS).
