PSU Banks' Recapitalisation: Govt sanctions Rs 23,000 crore

Finance Ministry has said that it will provide Rs 22, 915 crore to 13 public sector banks in an effort to meet their recapitalisation needs.

In a statement, the Government said, “The capital infusion exercise for the current year is based on an assessment of need as assessed from the CAGR 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.”

Shares of public sector banks reacted positively after the news. SEE LIVE prices here. 

Corporation  Bank, Bank of Baroda, Allahabad Bank, Canara Bank were trading higher by 2.58%, 1.51%, 1.59%, 3.77%, respectively at 1300 hours.  

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, it said.

The remaining amount, to be released later is linked to performance, with particular reference to greater efficiency, growth of both credit and deposits and reduction in the cost of operations, the Ministry of Finance said in a statement. 

Earlier this year, Finance minister Arun Jaitley said the government will provide Rs 25, 000 crore in the 2016-17 budget for infusion into public sector banks.

The 13 banks receiving recapitalization are as follows.

Image Source: Twitter/ Ministry of Finance