Govt to provide adequate capital to PSU banks: FM

Mumbai: Indian Finance Minister Pranab Mukherjee Saturday said the government will provide adequate capital to the state-owned banks during the current fiscal, a move that will help them to meet the international solvency norms.

"I would like to reassure, that I will provide adequate capital to the banks as and when necessary…there should be no apprehensions about bank recapitalisation," he said while speaking at the Canara Bank function here in India`s financial capital.

The Minister further said that he had already earmarked Rs 6,000 crore for recapitalisation of public sector banks in the budget for 2011-12. "I have already earmarked Rs 6,000 crore this fiscal, if need be more would be provided", he said.

Mukherjee`s assurance to recapitalise the PSU banks comes within weeks of rating agency Moody`s downgrading the outlook of the Indian banking sector to `negative` from `stable`. However, another rating agency Standard&Poor`s has upgraded the ratings of the Indian banks saying that they are well regulated.

During the current fiscal several lenders, including SBI, Bank of Baroda, Syndicate Bank and Union Bank of India would be needing fresh capital to meet the global solvency norms.

The government during 2010-11 had provided capital support to the tune of Rs 20,157 crore to public sector banks.

The lenders which got funds from the government last fiscal include Punjab National Bank, Bank of Baroda, Union Bank of India, Oriental Bank of Commerce and UCO Bank.

Referring to the ongoing eurozone crisis, Mukherjee admitted that it would have an impact on growth prospects. "The eurozone crisis will impact our high growth trajectory and may even impact out journey on the path of fiscal consolidation," he added.