Centre will infuse Rs 42,000 crore in PSU banks in March next year

The government has decided that it will infuse a capital of 42,000 crores in PSU banks. Some part of the money will be given in December. Large PSBs like State Bank of India (SBI) and Punjab National Bank (PNB) may not need more infusion in this financial year ending March 2019. Banks like SBI and PNB did not require a further capital infusion from the government in 2018-19. PNB has already get regulatory capital twice so far. State-owned banks always require less capital to meet their financial norms. Reserve Bank of India, decided to postpone the deadline for them to meet the global norms or Basel-III requirement for a year till March 2020. The RBI Board last week, while deciding to retain the capital acceptability requirement for banks at 9 percent, agreed to extend the transition period for implementing the last tranche of 0.625 percent up to March 31, 2020. 

Rating agency Moody's Investors Service said the decision of the RBI board to extend the deadlines for banks to execute Basel-III guidelines is 'credit negative' and also bad for an image. The central government made public, the plan of Rs 2.11-lakh crore capital infusion in October last year for PSU banks. According to it, the PSBs were to get Rs 1.35 lakh crore through recapitalization bonds, and the balance Rs 58,000 crore through the raising of capital from the market. 

In Rs 1.35 lakh crore, the government has already pervaded about Rs 82,000 crore through the bonds. This step by the central government will improve the financial situation of PSU banks. Public-sector banks always face financial losses. It is the obligation of the central government to support PSU banks.