The Government's decision to infuse additional capital of Rs 6,000 crore in public sector banks will further strengthen their credit risk profiles. The move is expected to increase the Government shareholding in PSBs to at least 58 per cent, thereby increasing their financial flexibility to raise additional capital from the market by diluting Government stake later, said rating agency Crisil in a report released today.
Govt support
Currently, the Government has a shareholding of less than 58 per cent in 10 PSBs; some of these PSBs stand to benefit from this move.
The proposed capital infusion by the Government, over and above the already approved commitment of Rs 15,000 crore for 2010-11, further reinforces Crisil's belief that PSBs will continue to receive strong Government support. The Government infused capital aggregating Rs 3,100 crore in 2008-09 and 2009-10.
In the Budget for 2010-11, the Government committed an aggregate of around Rs 15,000 crore as additional capital to help PSBs maintain Tier I Capital Adequacy Ratio in excess of 8 per cent on an average by March 31, 2011.
In stages
As part of this programme, the Government infused Rs 1,500 crore in May, and about Rs 4,200 crore by September in a few PSBs.
The remaining infusion of Rs 9,300 crore and an additional Rs 6,000 crore are expected over the next few months, the report said.
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