New Delhi: The finance ministry on Tuesday announced a Rs.22,915 crore infusion into 13 state-run banks as the government looks to meet the capital needs of cash-strapped banks battling rising bad loans and losses.
The funds are being released to provide liquidity support to the banks and help them raise funds from the market, said a statement from the finance ministry, adding that the government will release the remaining amount at a later date but that will be linked to performance parameters like greater efficiency, growth of both credit and deposits and reduction in the cost of operations.
The finance minister had announced a total budget allocation of Rs.25,000 crore in this year’s budget towards capital infusion in state-run banks but had promised more funds depending on their requirements.
State Bank of India was allocated Rs.7,575 crore, Punjab National Bank Rs.2,816 crore, Indian Overseas Bank Rs.3,101 crore, Bank of India Rs.1,784 crore, Central Bank of India Rs.1,729 crore, Syndicate Bank Rs.1,034 crore and UCO Bank Rs.1,033 crore in Tuesday’s infusion.
Other state-run banks that received capital support included Canara Bank with an allocation of Rs.997 crore, United bank of India Rs.810 crore, Union Bank of India Rs.721 crore, Corporation Bank Rs.677 crore, Dena Bank Rs.594 crore and Allahabad Bank Rs.44 crore.
“The capital infusion exercise for the current year is based on an assessment of need as assessed from the CAGR (compound annual growth rate) of credit growth for the last five years, banks’ own projections of credit growth and an objective assessment of the potential for growth of each public sector bank. Consequent upon the above exercise, 75% of the amount collected for each bank is being released now to provide liquidity support for lending operations as also to enable banks to raise funds from the market,” the finance ministry said.