The tier-I capital of Dena Bank declined below 8 per cent by June 30 and this prompted the state-run bank to seek Rs 2,000 crore capital infusion from the central government, reports indicate.
Ashwani Kumar, Chairman and Managing Director of Dena Bank expects the central government to provide this capital in two tranches.
The bank’s capital adequacy ratio stood at 11.12 per cent by the end of June quarter, even as tier-I capital, which is critical to support loan growth, declined below 8 per cent to 7.28 per cent.
The fall in the tier-I capital prompted the bank to go slow on ramping up its loan book. The public sector lender requested for Rs 1,200 crore of capital infusion from the government in the last fiscal. However, it didn’t receive any as its tier-I capital was above 8 per cent in the previous fiscal.
It may be recalled that the central government earmarked Rs 14,000 crore for capital infusion into public sector banks in 2013-14.
Barring Dena Bank, other public sector lenders like IDBI Bank, Indian Overseas Bank, Bank of Maharashtra are also likely to see capital infusion from the government on priority basis due to their low core capital.
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