Home / Industry / Bank recapitalization: Govt infuses Rs9,502 crore in BOB and IOB

Mumbai: The government on Tuesday pumped in capital worth Rs9,502 crore in Bank of Baroda and India Overseas Bank, as part of the recapitalization plan to bolster capital levels ahead of the financial year end.

The government has released ,132 crore to Indian Overseas Bank, which was placed under the prompt corrective action by the Reserve Bank of India. The other beneficiary is Bank of Baroda which has received 5370 crore, according to notices sent by these lenders to the stock exchanges.

Finance minister Arun Jaitley in October had announced an unprecedented Rs2.11 trillion two-year road map to strengthen PSBs, reeling under high non-performing assets (NPAs) or bad loans.

Public sector banks will be capitalised in the current fiscal year through a mix of recapitalisation bonds (Rs80,000 crore) and direct infusion from budgetary allocations (Rs8,139 crore).

In addition, banks have raised more than Rs10,000 crore so far and will raise more in the coming months from the market, taking the total recapitalisation to over Rs1 trillion this fiscal.

IDBI Bank Ltd and Bank of India, which have been placed under prompt corrective action (PCA) by Reserve Bank of India, will receive the highest capital infusion from the government at Rs10,610 crore and Rs9,232 crore, respectively under this plan.

State Bank of India and Punjab National Bank, which are not under the PCA framework, will get Rs8,800 crore and Rs5,473 crore, respectively, as the government looks to support their growth.

PCA framework acts as an early warning exercise and facilitates corrective measures by banks to restore their financial health.

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