A recent press report said that the State Bank of India would be the major beneficiary of the Government’s recapitalization programme for banks. The bank might get around Rs.8000 to Rs.8500 through various instruments such as preference shares. The bank might issue follow on public offer and rights issue once the capital base is increased. But this FPO would be done only after this fiscal.
This recapitalization programme has been taken to ensure that all the banks would have 9 per cent Tier I capital under Basel III norms which is expected to be implemented between 2013 and 2019.
The Department of Financial Services has asked for additional fund of Rs.14, 000 crore for recapitalizing some public sector banks in the second supplementary demand for grants. The public sector banks would get a total of Rs.20, 000 crore once the proposal has been approved. The budget for 2011 – 12 has made a provision of Rs.6000 crore for recapitalization.
In his statement Mr. D.K. Mittal, Secretary of Department of Financial Services said that the proposal has been sent and the Expenditure Department and Department of Economic Affairs would decide on how much could be sanctioned.
He said that any bank with 58 per cent government shareholding and less than 8 per cent Tier I capital under Capital to Risk Weighted Asset Ratio (CRAR) would be eligible for recapitalization.
State Bank of India (SBI) having its headquarters in Mumbai is the largest Indian banking and financial services. SBI offers a wide range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The bank’s loan portfolio includes home loan, personal loan, car loans, mortgage loans, gold loan, education loans etc.