Govt sets parameters for PSBs to get 2nd round of funds

The Dollar Business Bureau

The Government of India has fixed parameters for the public sector banks (PSBs) for getting financial support and those banks which fulfill the set criteria after third quarter results would only be eligible for receiving funds.

“The Ministry of Finance has fixed some parameters for receiving financial support. Those banks that fulfill the given criteria after their third quarter results would be qualified for fund infusion,” according to sources.

In July, the government had announced Rs.22,915 crore for the first tranche of capital infusion for 13 PSBs.

“75 percent of the amount (Rs.22,915 crore)...is being released now to provide liquidity support for lending operations as also to enable banks to raise funds from the market," the Finance Ministry had said in a statement.

“The remaining fund, to be released afterwards, will be connected to the performance with specific reference to higher efficiency, growth in credit as well as deposits and cutting down of the operational cost,” the statement had said.

The second tranche of capital infusion would be apart from the remaining 25 percent of the Rs.22,915 crore that was announced in July, said sources.

The first round of funds was announced with the aim to improve the lending operations of the banks and make them capable to raise more funds from the market.

From the total of Rs.22,915 crore announced, State Bank of India (SBI) was given Rs.7,575 crore. It was followed by Indian Overseas Bank, which received Rs.3,101 crore and Punjab National Bank which received Rs.2,816 crore.

The other banks, which have received commitment of funds are Bank of India (BoI) - Rs.1,784 crore, Central Bank of India (CBI) – Rs.1,729 crore, UCO Bank – Rs.1,033 crore, Syndicate Bank – Rs.1,034 crore, Canara Bank – Rs.997 crore, Union Bank of India – Rs.721 crore, United Bank of India – Rs.810 crore, Corporation Bank – Rs.677 crore, Dena Bank – Rs.594 crore and Allahabad Bank – Rs.44 crore.