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Economy Sep 11, 2012

Govt can provide equity support to public banks for Basel-III

The government can easily provide an equity support of upto Rs 20,000 crore annually to state-run banks to meet stricter Basel-III capital norms, a senior official said, but warned that funding beyond that will be problematic.

Reuters

"Rs 15,000 to 20,000 crore (of capital infusion to banks) every year can be sustained without any issues. (But) if it goes beyond that, then we have a problem," Additional Secretary in the Department of Financial Services Sunil Soni said.

The government has a budgetary allocation of over Rs 14,000 crore towards recapitalisation of public sector
banks for FY13 and Soni said the amount will definitely be distributed among the needy banks.

The comments come within a week after RBI Governor D Subbarao pointed out that the government would find it difficult to fund banks' migration to the Basel-III norms due to its precarious fiscal condition.

PTI


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