Recapitalisation of PSU banks on Jaitley’s radar

Finance minister Arun Jaitley on Saturday said recapitalisation exercise of state owned banks will be given ‘high priority’ by the government, as this would help them to further expand and boost the financial inclusion programme.

While the banks would soon hit the market to raise resources, Jaitley underlined that they will remain in the public sector domain and the government stake will continue to be over 51%.

“We suggested proposal for recapitalising of public sector banks over the next four years, the government is also treating this as a very high priority item,” Jaitley said at a Canara Bank function.

To be in line with Basel-III norms, there is a requirement to infuse ` 2,40,000 crore as equity by 2018 in our banks, Jaitley said while presenting the Union Budget. The banks will raise capital from the market in a phased manner. The UPA government, in the interim budget, provided ` 11,200 crore to public sector banks as recapitalisation exercise.

Government banks are also set to hive off their non-core businesses which i nclude insurance and mutual funds to raise resources. Meanwhile, the finance ministry could look at preparing a draft cabinet note for government stake dilution in the State Bank of India next month.

“We have not decided yet on SBI stake dilution... We are preparing the roadmap at the moment (raising of capital by all public sector banks),” financial services secretary GS Sandhu said.