Rs 6,000-crore Equity held Back from Laggard State-Run Banks

Rs 6,000-crore equity held back from laggard state-run banks

The Centre did not release around Rs 6,500 crore to 13 public sector banks (PSBs) in 2016-17 under the Indradhanush plan as none of the banks met the performance standards.

“The government allocated a sum of Rs. 22,915 in 13 PSBs during the FY 2016-17 under the first tranche of capital infusion out of which a sum of Rs.16,414 (75%) was infused upfront,” the Ministry of Finance said in a statement on Wednesday.

The remaining amount of Rs 6,501 crore was supposed to be infused based on the performance of the respective PSBs. “However, none of them could achieve the set targets and therefore, the remaining 25% of the allocated capital has not been released so far,” the Ministry said.

The Central government had announced Indradhanush in 2015 to infuse Rs 70,000 crore out of budgetary allocation in state-owned banks over four financial years to meet their capital requirements in a bid to remain compliant with Basel III norms – international standards for banks to deal with risk management.

The performance standards, to be maintained by banks for getting the remaining portion of the capital infusion, included efficiency of capital use, growth of both credit and deposits and reduction in the cost of operations.

In 2016-17, the Centre had allocated Rs 22,915 crore for PSBs, which included Rs 7,575 crore for State Bank of India, Rs 3,101 crore for Indian Overseas Bank, Rs 2,816 crore for Punjab National Bank and Rs 1,784 crore for Bank of India.

Source: BS