Govt to provide capital to PSU banks: Pranab

Gurgaon: Finance Minister Pranab Mukherjee today said the government is committed to provide adequate capital to public sector banks to meet global risk norms. “I have already stated that we will try to provide adequate capital… Requirements of all banks cannot be done in one year. It will take time,” Mukherjee said on the sidelines of a function here.

“The guidelines have been approved. As per the Basel III norms, we will provide capital adequacy to all the public sector banks,” he said after inaugurating corporate office of Oriental Bank of Commerce (OBC). The draft guidelines on the Basel III capital regulations were released on December 30, for implementation from January 1, 2013 and will be completed in phases by January 1, 2019, Mukherjee said.

To strengthen risk management mechanism, RBI has issued issued draft guidelines, envisaging that the equity capital of a bank should not be less than 5.5 per cent of risk-weighted loans. These guidelines envisaged more stringent norms on capital adequacy, Mukherjee said, adding, “on our part, the government has committed to maintain the minimum 8 per cent Tier I (equity capital) in all public sector banks which is over and above the regulatory requirement of 6 per cent.”

He said the government had provided capital to state- owned banks last fiscal, and it is taking necessary steps to keep banks adequately capitalise in 2012-13 as well. In 2010-11, the government provided capital support to the tune of Rs 20,157 crore to public sector banks. They included Bank of Baroda, Union Bank of India, Oriental Bank of Commerce, UCO Bank and Dena Bank. This fiscal, the government will infuse over Rs 7,900 cr in SBI. It is slated to capitalise more banks by March.