The Finance Ministry has asked all public sector banks to submit capital raising plans following the Cabinet approval to reduction in government’s stake in state-run lenders to 52 per cent.
“Banks have been asked to make a detail presentation of the capital requirement over the next five years to meet Basel III norms,” sources said.
The fresh presentation would take into account latest first half year results and how much they would like to raise from the market, they said.
Accordingly, the Finance Ministry would also crystallise its view about allocation towards public sector banks during the current fiscal year, they added.
The government has already made a budget provision of Rs 11,200 crore towards recapitalisation of PSU banks for 2014-15. Besides, information has also been sought as to how much each bank would mobilise from other means, including selling of its stake in non-core business.
As part of raising capital, IDBI Bank has already initiated the process of selling its entire 5 per cent stake in National Stock Exchange (NSE) that may fetch the lender about Rs 1,000 crore.
Finance Minister Arun Jaitley in the first Budget speech had said, “To be in line with Basel-III norms there is a requirement to infuse Rs 2.40 lakh crore as equity by 2018 in our banks. To meet this huge capital requirement we need to raise additional resources to fulfil this obligation.”
While preserving the public ownership, the capital of these banks will be raised by increasing the shareholding of the people in a phased manner through the sale of shares largely through retail to common citizens of this country, he had said.
Keeping the huge capital requirement in the mind, the Union Cabinet earlier this month allowed public sector banks to raise up to Rs 1.60 lakh crore from markets by diluting government holding to 52 per cent in phases so as to meet Basel III capital adequacy norms.
The Cabinet asked the PSU banks to broadbase retail shareholding while going in for the fund raising.
Out of 27 PSU banks, Government of India controls 22 through majority holding. In the remaining 5 banks, state-run SBI holds majority stake.
Total government support provided to PSU banks towards capitalisation during the past four years was Rs 58,634 crore.