Finance ministry in talks with PSBs to get a fix on growth plans, funding

The finance ministry has initiated detailed discussions with select public sector banks to assess their growth blueprint over the next three years


For the full 2016-17, the government had pumped in Rs25,000 crore in the public sector banks. Photo: Hemant Mishra/Mint
For the full 2016-17, the government had pumped in Rs25,000 crore in the public sector banks. Photo: Hemant Mishra/Mint

Mumbai: The finance ministry has initiated detailed discussions with select public banks to assess their growth blueprint over the next three years and seek turnaround plans to check if they need more growth capital. The Department of Financial Services will be meeting representatives of 10 state-owned banks that received funds in March this year.

“The ministry officials have sought business plans for the next three years and also wanted detailed turnaround plans. Banks will also have to submit stressed asset resolution plans,” a senior public sector banker said.

The officials will also be assessing capital needs of each bank for the next three years, person aware of the development added. In the second tranche of capital infusion, the government had infused Rs8,586 crore in 10 banks in March. For the full 2016-17, it had pumped in Rs25,000 crore. The recipients last fiscal were Bank of India (Rs1,500 crore), Bank of Maharashtra (Rs300 crore), IDBI Bank (Rs1,900 crore), Indian Overseas Bank (Rs1,100 crore), Central Bank of India (Rs100 crore), Dena Bank (Rs600 crore), UCO Bank (Rs1,150 crore), Andhra Bank (Rs1,100 crore), United Bank of India (Rs418 crore) and Allahabad Bank (Rs418 crore).

Talks are part of the Indradhanush plan which involved banks submitting detailed growth plans and indicating how they are going to deploy the funds to get additional money. Some banks have already got calls from the ministry for the meeting and the bankers will be meeting individually.

The government funding is linked to strict parameters. The first tranche of capital infusion for fiscal 2017 was announced in July 2016. As per the road map announced in August 2015, the government will infuse Rs70,000 crore into the banks over four years while they will have to raise an additional Rs1.1 trillion from the markets to meet their capital requirements, in line with global risk norms Basel-III. Public sector banks are to get Rs25,000 crore in each fiscal of 2016 and 2017 and Rs10,000 crore each in fiscal 2018 and 2019. The Budget has allocated Rs10,000 crore in the current financial year.

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