The government on Tuesday said it is releasing Rs 22,915 crore to recapitalise 13 PSU Banks, including the biggest lender State Bank of India. The sum is about 92% of the budgeted provision of Rs 25,000 crore.
The highest sum of Rs 7,575 crore is being released for SBI, followed by Rs 3,101 crore for Indian Overseas Bank and Rs 2,816 crore for Punjab National Bank, a government statement said on Tuesday.
The yardstick for allocation was capital requirements of the banks based on compounded annual growth rate for the last five years, banks’ own projections of credit growth and an objective assessment of the potential for growth of each PSU bank.
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, the statement 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.
In line with the announcements made under Indradhanush and the Budget, the government undertook an exercise to assess the capitalization needs of PSU Banks for 2016-17.
Finance minister Arun Jaitley had said the government might release higher sum than provided in the Budget, if resources permit it.