Financial Services Secretary DK Mittal informed that the government would soon decide on allocation of funding to boost the capital base of public sector banks.
He also said that boards of each of the banks that need capital would have to decide whether they want to infuse capital through a rights issue.
Leading public sector banks that need capital infusion are
Indian Overseas Bank, Central Bank of India and the Bank of Maharashtra. State Bank of India would also need capital, Mittal said.
While Indian Overseas Bank requires Rs 1,500 crore of capital infusion, Bank of Maharashtra has sought Rs 800 crore from the finance ministry. All but Dena Bank has tier I capital of above 8 per cent, well above Basel norms.
Government is expected to infuse Rs 15,000 crore capital in public sector banks. In 2011-12, the finance ministry pumped in Rs 12,000 crore in public sector banks to maintain their capital adequacy ratio, while it gave Rs 20,157 crore in 2010-11.
Meanwhile, it is learnt that the RBI is broadly on board to a proposal for a financial holding company to raise resources for re- capitalisation of banks.
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