The finance ministry says it is committed to capitalising State Bank of India, while playing down Moody's downgrade of the country's largest lender on Tuesday.
The government's bank capitalisation programme was independent of the perception of global rating agencies, a finance ministry official said on Wednesday.
"There is no need to panic. The government is committed to maintaining an 8% tier-I capital adequacy in all public sector banks. SBI also will be adequately capitalised." Moody's downgraded SBI a notch to 'D+ citing low tier-I capital ratio and deteriorating asset quality.
Tier I is a bank's core capital, comprising equity and stated reserves.
The ministry said investors should not be concerned with the downgrade. While RBI guidelines mandate tier-I capital adequacy ratio at 6%, SBI's Tier I CAR stood at 7.60% as of June 30. "It's the government's policy to keep it (CAR) at 8%, so prudentially the bank is strong enough," the official said. On Wednesday, SBI ended 4% down at Rs 1,715.3, losing almost 8% in two trading sessions.
"We will soon allocate Rs 3,000 crore to SBI's core equity capital. The finer details on how SBI will be capitalised further is being worked out. It can be through a rights issue or any other method," the official said.
The finance ministry had allocatedRs 6,000 crore towards bank capitalization during the current financial year. Of this half the amount is expected to go to SBI.
The bank has indicated that it requires around Rs 20,000 crore to fund its growth plans over the next two fiscals. If this rights issue is approved, the government, which owns 59.4% in the bank, will have to contribute up to Rs 12,000 crore. In 2010-11, the government had infusedRs 20,157 crore in state-run banks to help them achieve a tier-I capital adequacy ratio at 8%.
"NPAs are an issue with all banks. The finance minister has also directed banks to control their bad assets," the official said, adding that the ministry has already constituted a committee to look into Asset Reconstruction Companies.
As of March 31, the gross NPA of public sector banks stood atRs 71,047 crore. "So we are also looking to develop the ARC business in the country to handle this bad asset issue at both the bank level and, through an ARC," the official said.
+1.jpg)
0 comments
Post a Comment