Some banks have already got approval from the finance ministry, while others are in the process of getting the green signal for raising capital either through private placement or the rights issue.
Eight public sector banks (PSBs) have decided to raise capital from the market within four months as part of the Rs 2.11 lakh crore recapitalisation plan, according to official sources. Some banks have already got approval from the finance ministry, while others are in the process of getting the green signal for raising capital either through private placement or the rights issue.
Most banks have preferred the Qualified Institutional Placement (QIP) route, sources said, adding that Punjab National Bank would be the first to hit the market to raise Rs 5,000 crore. Bank of Baroda, Bank of India, Union Bank of India, Allahabad Bank and Andhra Bank are also gearing up for the share sale.
In October, Finance Minister Arun Jaitley had announced a Rs 2.11 lakh crore two-year roadmap to strengthen PSBs. Their NPAs have increased to Rs 7.33 lakh crore as of June 2017, from Rs 2.75 lakh crore in March 2015. The plan includes floating re-capitalisation bonds of Rs 1.35 lakh crore and raising Rs 58,000 crore from the market by diluting the government's stake.
The government equity, as per the current policy, can come down to 52 per cent in state-owned banks. Jaitley had also announced that banks would get about Rs 18,000 crore under the Indradhanush plan over the next two years.
Under the Indradhanush plan, the government had announced infusion of Rs 70,000 crore in state- owned banks over four years, while banks have to raise a further Rs 1.1 lakh crore from the market to meet their capital requirement in line with Basel-III norms.
In the last three-and-a-half years, the government has pumped in Rs 51,858 crore in the PSBs. The remaining Rs 18,142 crore will be injected into the banks over the next two years.
Source: Business Standard