The government has approved a Rs 48,239 crore recapitalisation plan for 12 public sector banks (PSBs), including the fraud-hit Punjab National Bank (PNB), to help them avoid and come out of the prompt corrective action (PCA) framework.
The move also intends to help the non-PCA banks perform better and avoid the restrictions.
The government will infuse Rs 6,896 crore in Allahabad Bank, Rs 4,112 crore in Union Bank, Rs 205 crore in Bank of Maharashtra, Rs 4,638 crore in Bank of India, Rs 9,086 crore in Corporation Bank and Rs 3,806 crore in Indian Overseas Bank (IOB), said Banking Secretary Rajiv Kumar.
It will also put in Rs 3,256 crore in Andhra Bank, Rs 1,603 crore in Syndicate Bank, Rs 5,908 crore in PNB, Rs 2,560 crore in Central Bank of India, Rs 2,839 crore in United Bank and Rs 3,330 crore in UCO Bank, he said.
In December, the government increased the bank recapitalisation outlay to Rs 1.06 lakh crore for 2018-19.
This was done to help two better-performing PSBs remain above the regulatory PCA triggers and to ensure that PSBs brought out remain above the PCA triggers, Kumar said. The move also aimed to facilitate non-PCA banks that are in breach of some PCA thresholds to not be in breach.
Kumar said the government had given Rs 15,982 crore in total to Allahabad Bank (Rs 6,896 crore) and Corporation Bank (Rs 9,086 crore) as these two lenders were better performing PCA banks and the funding would help them to be above the regulatory PCA threshold.
The Finance Ministry is also providing Rs 4,843 crore in total to Bank of India (Rs 4,638 crore) and Bank of Maharashtra (Rs 205 crore), which exited PCA recently, to help them remain above the PCA triggers.
Together, the Central Bank (Rs 2,560 crore), United Bank (Rs 2,839 crore), UCO Bank (Rs 3,330 crore) and IOB (Rs 3,806 crore) have received Rs 12,535 crore as minimum regulatory capital to escape PCA.
Taking a futuristic timeline, the government has extended Rs 14,879 crore to the non-PCA banks - PNB (Rs 5,908 crore), Union Bank (Rs 4,112 crore), Andhra Bank (Rs 3,256 crore) and Syndicate Bank (Rs 1,603 crore) - so that they remain above the PCA threshold.
The enhanced recapitalisation provision was aimed at providing capital to better-performing PCA banks to achieve 9 per cent Capital to Risk-weighted Asset Ratio (CRAR), 1.875 per cent Capital Conservation Buffer and the 6 per cent net NPA threshold, facilitating them to come out of PCA.
It was aimed to strengthen amalgamating banks by providing regulatory and growth capital.
--IANS
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