Modi government can provide capital to public sector banks in the third quarter

The Finance Ministry may provide capital support to public sector banks in the third quarter of the current financial year. In the recently concluded session of Parliament, funds worth Rs 20,000 crore have been approved for public sector banks. Parliament has approved Rs 20,000 crore for public sector banks under the first batch of supplementary demand for grants for 2020-21.

Sources said that banks could be made available to banks in the October-December quarter to meet regulatory capital requirements, if required. Sources said the second quarter results of the banks will give an idea of ​​which bank needs regulatory capital and will be issued recapitalization bonds accordingly.

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In addition, public sector banks have already received shareholders’ approval to raise capital through equities and bonds during the current financial year. It is noteworthy that the government did not make any commitment in the Budget 2020-21 to infuse capital in public sector banks. The government hoped that the banks would raise capital from the market according to their needs. In the financial year 2019-20, the government had infused Rs 70,000 crore in public sector banks.

In the last financial year, Punjab National Bank received an investment of Rs 16,091 crore from the government. Union Bank of India received Rs 11,768 crore, Canara Bank got Rs 6,571 crore and Indian Bank got Rs 2,534 crore. Similarly, Allahabad Bank received Rs 2,153 crore, United Bank of India Rs 1,666 crore and Andhra Bank got Rs 200 crore. These three banks have now merged with other banks.

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