State Bank of India (SBI), the country’s largest lender, on Monday said the government had approved capital infusion of Rs 6,000-8,000 crore into the bank by March 31.
“The finance ministry had approved (the plan) long back. Even the Planning Commission’s approval is in place. It (capital infusion) should be between Rs 6,000 crore and Rs 8,000 crore be done before March 31,” chairman Pratip Chaudhuri told reporters here.
The government had already announced it was committed to providing adequate capital to public sector banks to maintain their Tier-I capital at eight per cent. As of September, SBI’s capital adequacy ratio stood at 11.4 per cent. Of this, Tier-I capital stood at 7.47 per cent at the end of the second quarter, against the minimum eight per cent desired by the government.
The government, which holds 59.4 per cent stake in the bank, has earmarked the infusion amount to ensure the bank meets regulatory requirements.
SBI had submitted a proposal a few months ago to raise Rs 20,000 crore through a rights issue. The bank requires this to fund growth plans over the next two financial years. It had raised Rs 16,000 crore through a rights issue in 2008. In the last rights issue, the government’s contribution was in the form of bonds.
Chaudhuri said chances of the Reserve Bank of India going for a rate cut in the immediate future were slim. “I am not very hopeful,” Chaudhuri said, when asked about the possibility of an interest rate cut by the apex bank in view of the moderation in headline inflation to a two-year low of 7.47 per cent in December.
Most public sector banks had secured capital support from the government in the last financial year. The government had provided capital support of Rs 20,157 crore to these banks, which included Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank. Financial services secretary D K Mittal had said state-run banks would require about Rs 3.5 lakh crore by 2021.
A committee headed by finance secretary R S Gujral is working out a strategy for the required capital infusion in public sector banks over the next 10 years.
