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New Delhi, July 17
The Finance Ministry on Tuesday approved infusion of Rs 11,336 crore in five state-owned lenders, including PNB, Corporation Bank and Andhra Bank, to help them meet regulatory capital requirement, sources said.
This is the first ever capital infusion in the current fiscal and the remaining amount of Rs 53,664 crore would be disbursed during the course of the year.
As per the plan, the sources said, PNB, hit by Nirav Modi scam, will get the highest amount of Rs 2,816 crore while Allahabad Bank will get Rs 1,790 crore.
Besides, Andhra Bank will get Rs 2,019 crore, Indian Overseas Bank Rs 2,157 crore and Corporation Bank Rs 2,555 crore.
These banks have come under pressure because of interest payment to their bond holders of Additional Tier 1 (AT-1) bonds, the sources said.
As a result, they were facing the risk of breaching the regulatory capital requirement, they said, adding that the ministry has decided to provide capital to 4-5 banks which are facing “acute shortage”.
Banks raise capital through AT1 bonds, which are perpetual in nature and therefore provide higher interest rate to investors. High bad loans and widening losses have made it difficult for banks to service these bonds from their own earnings.
The infusion would be part of remaining Rs 65,000 crore out of Rs 2.11 lakh crore capital infusion over two financial years.
The government announced Rs 2.11 lakh crore capital infusion programme in October last year. As per the plan, the public sector banks (PSBs) were to get Rs 1.35 lakh crore through re-capitalisation bonds, and the balance Rs 58,000 crore through raising of capital from the market. — PTI
First capital infusion this fiscal
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