Govt clears Rs 12,000 cr capital infusion in PSBs: Official

The government has approved the first tranche of Rs 12,000 crore fund infusion in state-owned banks, a moved aimed at enhancing their capital base, a senior official said.

"We have cleared the first tranche of Rs 12,000 crore capital infusion in public sector banks," the official said.

The government has made Budget provision of Rs 15,000 crore for recapitalisation of public sector banks in the current fiscal.

While further details were not known immediately, sources said the top three banks which require capital are Indian Overseas Bank, Central Bank of India and the Bank of Maharashtra.

In 2010-11, the government had pumped in Rs 20,157 crore in public sector banks to maintain Tier-I capital at 8 per cent and increase the government equity in some banks to 58 per cent.

In the following fiscal, state owned banks got Rs 12,000 crore for improving their capital adequacy ratio.

In order to strengthen risk management mechanism, the Reserve Bank issued guideline for Basel III earlier this year.

The implementation of the capital adequacy guidelines based on the Basel III capital regulations will begin from January 1, 2013.

The guideline envisages banks to maintain a minimum total capital (MTC) of 9 per cent against 8 per cent prescribed by the Basel Committee of total risk weighted assets.

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