Left Menu
Development News Edition

Govt unlikely to announce capital infusion for PSU banks in Budget


Govt unlikely to announce capital infusion for PSU banks in Budget
Image Credit: Pixabay

The government is unlikely to announce capital infusion for the public sector banks (PSBs) in the upcoming Budget and will rather encourage them to expedite recovery of bad loans and raise funds from the market. Besides, sources said, banks may also look for divesting or selling their non-core business as part of fundraising exercise during 2020-21.

Finance Minister Nirmala Sitharaman is expected to present the second budget of the Modi 2.0 government on February 1. According to sources, banks have robust pipeline of recovery from the resolution of both NCLT and non-NCLT cases during this calender year and also headroom for raising capital from the market.

The provision coverage ratio of public sector banks is at a 7-year high of 76.6 percent. In some of the non-performing assets, banks have done provisions up to 100 percent, sources said, adding that recovery from those account will straightaway form part of the bottomline.

Share price of some of the banks are firming up which provide them opportunity to dilute government holding, sources said. Country's largest lender State Bank of India (SBI) has already initiated the process of diluting its stake in its subsidiaries SBI Cards and Payment Services Ltd and UTI Mutual Fund.

It is looking to sell 50 lakh shares representing 1.01 percent stake in the National Stock Exchange (NSE). Similar exercise is being undertaken by other state-owned lenders as well in an effort to raise capital.

In addition, the government has already front loaded Rs 68,855 crore, out of Rs 70,000 crore earmarked for capital infusion for the current fiscal, to take care of the mega-merger plan announced in August, 2019. Among all four anchor banks -- Punjab National Bank was given Rs 16,091 crore, Union Bank of India Rs 11,768 crore, Canara Bank Rs 6,571 crore and Indian Bank Rs 2,534 crore.

Merging entities like Allahabad Bank was provided Rs 2,153 crore, United Bank of India 1,666 crore and Andhra Bank Rs 200 crore. Besides, Bank of Baroda got a capital infusion of Rs 7,000 crore, Indian Overseas Bank Rs 4,360 crore, UCO Bank Rs 2142 crore, Punjab & Sind Bank 787 crore and Central Bank of India Rs 3,353 crore.

LIC-controlled IDBI Bank too received additional capital of Rs 4,557 crore through the first supplementary demands for grants approved by Parliament last month. With the deadline of March 31 to complete other regulatory requirements, the merged entity will come into existence beginning next fiscal.

Alternative Mechanism of Government of India gave in-principle approval for the merger of United Bank of India and Oriental Bank of Commerce with Punjab National Bank, making the proposed entity the second largest public sector bank (PSB). Syndicate Bank will be merged with Canara Bank, while Allahabad Bank will be amalgamated with Indian Bank.

Similarly, Andhra Bank and Corporation Bank will be consolidated with Union Bank of India. The government remains committed to maintaining financial health of public sector banks and it will provide capital in case if the need arises in the future, sources added.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.


TRENDING

OPINION/BLOG/INTERVIEW

Top 10 Fake News, Myths and Realities on 2019 Novel Coronavirus COVID 19

With nearly 1500 deaths by January 14 and around 65,000 infections in China, the Novel Coronavirus 2019 has become one of the worst health epidemics of the 21st Century. However, 8,573 people have been cured but the rumor mongers are a...

Handling fake news Infodemic in time of Coronavirus epidemic

Social media has provided a platform where everybody can disseminate his her views without any supervision. Its excellent if the message is genuine but misinformation is equally disastrous. Health is such a topic where every Tom and Harry c...

Sentiment Analysis on Budget 2020: Long shot for solution to economic worries?

Industries and individuals alike had high expectations from the government to take tangible steps but the budget 2020 seems to have failed expectations....

How can technology help the future of mobility?

More than a billion people or one-third of the global rural population lacked access to all-season roads and transport services in 2016, subsequently hindering the socio-economic development....

Videos

Latest News

India will also send medical supplies to Wuhan for coronavirus-hit people: Military sources to PTI.

India will also send medical supplies to Wuhan for coronavirus-hit people Military sources to PTI....

Orient Electric to expand premium fans segment

Orient Electric, which has a leadership position in the premium fans segment, would continue to expand the category, said a top company official. The company, which is part of the USD 2.4-billion CK Birla Group, on Monday introduced interne...

Assam University postpones convocation

The convocation of Assam University has been postponed even as the indefinite hungerstrike by students against the rustication of a research scholar entered ninth day on Tuesday.AU Vice-Chancellor Prof Dilip Chandra Nath said the scheduled ...

UPDATE 2-Canada passenger trains to run again, pipeline protests block freight

Passenger operator VIA Rail Canada said on Tuesday it would soon resume partial services between Quebec City and Ottawa while the government sought to end anti-pipeline protests that are blocking rail freight in eastern Canada. VIA Rail sai...

Give Feedback