Banks To See Rs 12500 Crore Capital Infusion In FY13

DSIJ Intelligence / 27 Feb 2013

The government is soon expected to infuse around Rs 12500 crore in capital into public sector banks. This would take place in the next month, on or before March 31, 2013.

The government is soon expected to infuse around Rs 12500 crore in capital into public sector banks, which will boost their capital adequacy ratio (CAR) and improve their overall financials. This was reduced by approximately by Rs 3388 crore, as initial estimates in the last budget (2012-2013) were of Rs 15888 crore.

The capital infusion in banks would take place in the next month, on or before March 31, 2013.

Estimated Capital Infusion In Various Banks in FY13
Name of the bankCapital Infusion (Rs Cr)
State Bank of India 3004
Union Bank of India 2500
Central Bank of India 2406
Punjab National Bank 1250
Indian Overseas Bank 1000
Bank of Baroda 860
UCO Bank 681
Bank of Maharashtra 406
United Bank of India 100
State Bank of India is expected to get the highest amount of capital, which comes as no surprise considering its huge size. According to media reports, the bank is expected is going to issue shares to the government on a preferential basis at a price of Rs 2312 per share, which is approximately 5% above the current market price of Rs 2210 per share.

Union Bank of India and Central Bank would also receive approximately Rs 2500 and 2406 crore respectively. Punjab National Bank, India Overseas Bank, Bank of Baroda and UCO Bank are among the others expected to receive capital by the end of March 2013.

In the next fiscal (FY14), banks would be requiring higher capital in order to meet the compliance requirements as per the Basel III norms. The markets expect the capital infusion for FY14 to go up to Rs 20000 crore. An announcement on the same would be made in the Budget (2013-2014) on February 28, 2013. The budget announcement is the major trigger for the banking space. Watch this space and our Budget page for more updates.

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