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Government to infuse Rs 48,239 crore into 12 PSBs to help them avoid PCA
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SME Times News Bureau | 20 Feb, 2019
The government has approved a Rs 48,239 crore recapitalisation plan for
12 public sector banks (PSBs), including the fraud-hit Punjab National
Bank (PNB), to help them avoid and come out of the prompt corrective
action (PCA) framework.
The move also intends to help the non-PCA banks perform better and avoid the restrictions.
The
government will infuse Rs 6,896 crore in Allahabad Bank, Rs 4,112 crore
in Union Bank, Rs 205 crore in Bank of Maharashtra, Rs 4,638 crore in
Bank of India, Rs 9,086 crore in Corporation Bank and Rs 3,806 crore in
Indian Overseas Bank (IOB), said Banking Secretary Rajiv Kumar.
It
will also put in Rs 3,256 crore in Andhra Bank, Rs 1,603 crore in
Syndicate Bank, Rs 5,908 crore in PNB, Rs 2,560 crore in Central Bank of
India, Rs 2,839 crore in United Bank and Rs 3,330 crore in UCO Bank, he
said.
In December, the government increased the bank recapitalisation outlay to Rs 1.06 lakh crore for 2018-19.
This
was done to help two better-performing PSBs remain above the regulatory
PCA triggers and to ensure that PSBs brought out remain above the PCA
triggers, Kumar said. The move also aimed to facilitate non-PCA banks
that are in breach of some PCA thresholds to not be in breach.
Kumar
said the government had given Rs 15,982 crore in total to Allahabad
Bank (Rs 6,896 crore) and Corporation Bank (Rs 9,086 crore) as these two
lenders were better performing PCA banks and the funding would help
them to be above the regulatory PCA threshold.
The Finance
Ministry is also providing Rs 4,843 crore in total to Bank of India (Rs
4,638 crore) and Bank of Maharashtra (Rs 205 crore), which exited PCA
recently, to help them remain above the PCA triggers.
Together,
the Central Bank (Rs 2,560 crore), United Bank (Rs 2,839 crore), UCO
Bank (Rs 3,330 crore) and IOB (Rs 3,806 crore) have received Rs 12,535
crore as minimum regulatory capital to escape PCA.
Taking a
futuristic timeline, the government has extended Rs 14,879 crore to the
non-PCA banks - PNB (Rs 5,908 crore), Union Bank (Rs 4,112 crore),
Andhra Bank (Rs 3,256 crore) and Syndicate Bank (Rs 1,603 crore) - so
that they remain above the PCA threshold.
The enhanced
recapitalisation provision was aimed at providing capital to
better-performing PCA banks to achieve 9 per cent Capital to
Risk-weighted Asset Ratio (CRAR), 1.875 per cent Capital Conservation
Buffer and the 6 per cent net NPA threshold, facilitating them to come
out of PCA.
It was aimed to strengthen amalgamating banks by providing regulatory and growth capital.
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