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Clearn­ing decks for cap­i­tal in­fu­sion for pub­lic sec­tor banks, the Fi­nance Min­istry has de­cided to pump in Rs 2,000 crore in State Bank of In­dia and Rs 1,800 crore each in IDBI Bank and Cen­tral Bank of In­dia to au­gu­ment their cap­i­tal base. All the pub­lic sec­tor banks with the ex­cep­tion of Chen­naibased In­dian Bank will be get­ting amount rang­ing be­tween Rs 100 crore to Rs 2,000 crore. In­dian Bank has in­di­cated to the Fi­nance Min­istry that it did not need fresh cap­i­tal. “SBI is get­ting Rs 2,000 crore. Big­ger banks are get­ting more,” Fi­nan­cial Ser­vices Sec­re­tary Ra­jiv Takru said. Be­sides the cap­i­tal sup­port from the govern­ment, he said, pub­lic sec­tor banks have the head­room to raise Rs 10,000 crore from the mar­ket though rights is­sue, Qual­i­fied In­sti­tu­tional Place­ment (QIP) or fol­low-on pub­lic of­fer without di­lut­ing ex­ist­ing govern­ment stake. This money has been given to en­hance eq­uity cap­i­tal not for any other pur­pose, he said, adding, “for the mo­ment this is good enough to see them through.” Yes­ter­day, Fi­nance Min­is­ter P Chi­dambaram had more than ad­e­quately made clear that the govern­ment would be al­lo­cat­ing Rs 14,000 crore through Bud­get, Takru said. “Other than this, banks board could take decisions on how they want to raise ad­di­tional eq­uity. They have there op­tions, they have rights is­sue, they have QIP op­tion they have FPO op­tion. “But in any case we have made am­ply clear that they could pro­por­tion­ately tap the out­side mar­ket, and in­crease the their eq­uity. The banks would be able to gen­er­ate Rs 10,000 crore,” Fi­nan­cial Ser­vices Sec­re­tary said. Other banks like In­dian Over­seas Bank would be get­ting Rs 1,200 crore while Pun­jab Na­tional Bank would get Rs 500 crore. Dur­ing the cur­rent fis­cal, Bank of Bar­oda will get Rs 550 crore, Ca­nara Bank Rs 500 crore, Al­la­habad Bank Rs 400 crore, Bank of Ma­ha­rash­tra Rs 800 crore and Dena Bank Rs 700 crore. Be­sides, Bank of In­dia will get Rs 1,000 crore, Cor­po­ra­tion Bank Rs 450 crore, Union Bank of In­dia Rs 500 crore, United Bank of In­dia Rs 700 crore, Ori­en­tal Bank of Com­merce Rs 150 crore and Pun­jab and Sind Bank Rs 100 crore. The se­cond round of cap­i­tal in­fu­sion may come in the fourth quar­ter of the cur­rent fis­cal depend­ing upon banks’ re­quire­ments. “We will be giv­ing them more af­ter judg­ing their per­for­mance (based on con­ces­sional lend­ing to­wards home, auto and con­sumer durable),” Takru said. By the end of third quar­ter it would be am­ply clear how much ad­di­tional lend­ing banks would re­quire, he added. Asked about qual­i­fied in­sti­tu­tional place­ment (QIP) of SBI, Takru said: “They would be rais­ing the funds pro­por­tion­ately. The govern­ment has 62 per cent stake so they can raise funds from the mar­ket upto 38 per cent. It could be Rs 1,500 crore, Rs 1,600 crore and Rs 1,700 crore.”

Fi­nance Min­is­ter P Chi­dambaram

Fi­nan­cial Ser­vices Sec­re­tary Ra­jiv Takru

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