Cabinet Approved Capital Infusion in Ten Public Sector Banks

In a meeting of the Indian Cabinet headed by Prime Minister Manmohan Singh on  1 December 2010 the additional capital infusion of Rs.6000 crore in 10 public sector banks was approved of. The approval for the infusion was given with an objective to raise its holding to a minimum 58 per cent in all state-run banks. The government had in the 2010-11 budget mentioned an infusion of Rs.15000 crore to raise capital adequacy ratio of all the public sector banks to 7 per cent. The government’s decision to infuse the funds will now enable banks additional headroom to raise funds from capital markets without depending on the government.

If the government holding is at 51 per cent then the banks cannot access the capital market for raising additional capital by dilution of government holding. Banks where the government's equity is less than 58 per cent include, Bank of Baroda, Oriental Bank of Commerce, Andhra Bank, Dena Bank, IDBI Bank and Vijaya Bank.