The State Bank of India is expected to get Rs 8,000-8,500 crore during the current fiscal. This amount is likely to be given through various instruments such as preferential shares. Once its capital base is augmented, SBI can go for a follow-on public offer or a rights offer which can be done only after this fiscal.
The effort is to see that not just SBI but all the banks have 9 per cent of Tier-I capital under Basel-III norms. These norms are to be implemented between 2013 and 2019.
The Department of Financial Services (DFS) wants an additional Rs 14,000 crore for recapitalising some public sector banks. It has asked for the money in the second supplementary demand for grants. Once approved, the public sector banks will receive a total of Rs 20,000 crore during the current financial year. The 2011-12 Budget had made a provision of Rs 6,000 crore for recapitalisation.
Any bank with a government shareholding up to 58% and less than 8% Tier-I capital under Capital to Risk Weighted Asset Ratio will be eligible for recapitalisation. The objective is to ensure that all the 26 public sector banks have a minimum of 58% government shareholding and 8% capital under Tier-I by March 31, 2012.
The Government is also preparing a 10-year programme to augment the capital base of the public sector banks. The 10-year timeframe starts from the current fiscal and ends in 2021. The plan is to provide a total of Rs 4-4.25 lakh crore to all public sector banks.