Public Sector Banks get injected with Rs 48,239 crores of recapitalisation..!

New Delhi, February 21: Helping the public sector banks to maintain regulatory capital requirements and aid in financial growth plans, the government on Wednesday have approved the monetary recapitalisation of Rs 48,239 crores in the current fiscal year.

 

In a tweet series, the Financial Services Secretary Rajiv Kumar said that this kinda recapitalization will help these banks perform better. “The government will infuse over Rs 9000 crores in Corporation Bank and Rs 6896 crore rupees in Allahabad Bank”, he added further.

Recapitalization is a type of corporate reorganization involving substantial change in a company's capital structure. It may be motivated by a number of reasons. Usually, the large part of equity is replaced with debt or vice versa. Since the Government is the majority shareholder in the public sector banks, it has to provide equity capital, if the banks are struggling. This injection of capital can be usually named as the recapitalisation of banks.

 

They are better-performing banks currently under the Prompt Corrective Action (PCA) supervision of the RBI. Besides, Rs 4638 crore will be provided Bank of India and Rs 205 crore to Bank of Maharashtra. These banks have recently come out of the regulatory supervisory framework PCA of the RBI.

Kumar also said that Punjab National Bank will get over Rs 5,900 crore, Union Bank of India Rs 4,112 crore, Andhra Bank 3,256 crore and Syndicate Bank will get over Rs 1,600 crore. The government will also pump in Rs 12,535 crores in Central Bank of India, United Bank, UCO Bank and Indian Overseas Bank, together.

With this tranche, the government has now infused Rs 1,00,958 crore of the Rs 1.06-lakh crore bank capitalisation programme to the total for this financial year. This capital infusion may help them exit the lenders regime. With as many as 11 banks under the Principle Component Analysis (PCA), the government has stated that the credit growth has suffered and it has sought relaxation of the framework.