The government may infuse an additional
Rs 10,000 crore in public sector banks in FY18 itself, thereby advancing its
FY19 capital infusion plan, CNBC TV18 reported citing sources.
In addition to
direct infusion of capital, the government will also be issuing
recapitalisation bonds to PSU banks, the first tranche of which will consist of
bonds worth around Rs 70,000 crore.
All banks will
be covered under the recap bond issuance, which includes both growth capital as
well as regulatory capital to cover provisioning.
In line with the
government's instructions, public sector banks may start tapping markets from
December onward since government approval is already in place. Banks may
opt for a qualified institutional placement (QIP) and follow-on public
offerings (FPO) of up to Rs 2,000 crore each.
Over 67 banks have
been shortlisted to be issued recapitalisation bonds. The quantum of capital
infused will be based on three-year CAGR and growth projections, sources said. This additional
infusion will come out of the Indradhanush scheme, which offers over Rs 20,000
crore of budgetary support to PSU banks from the government.
Finance Minister Arun
Jaitley had announced a PSU banks recapitalisation plan of
Rs 2.11 lakh crore on October 24 in a bid to shore up their finances, boost
private investment and revive the economy. The plan is expected to be spread
over two years to bolster banks' finances and revive the economy and is the
largest such undertaking in India to date.The
government has been in discussion
with the Reserve Bank of India and other banks for the bond issue and
the amount to be raised for the first tranche is yet to be fixed.
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