The government cannot allocate funds for bank capitalization in the FY 2013 budget, which will happen for the first time in a decade. This is when all state-run banks have become profitable and the newly established bad bank is expected to help free up capital for the lenders.

In the FY22 budget, the government had set aside Rs 20,000 crore for bank capitalisation.

“We don’t need any capital for the lenders going forward. All of them have plans to raise capital from the market,” said a government official. This year the allotment will be done by the end of March, he said.

“As the economy recovers, we do not expect bad loans to rise, putting pressure on the financial position of PSBs,” he said, adding that the government, however, remains committed to our banks and will continue to do so as and when required. will provide assistance to them. The booming capital markets are expected to ease capital raising.

Last month, Finance Minister Nirmala Sitharaman The 4R strategy of the Government of Recognition, Resolution, Recapitalization and Reform has led to a paradigm shift in the performance of Public Sector Banks (PSBs). “While in 2018, only two out of 21 PSBs were profitable, in 2020-21, only two lenders reported loss,” he said, adding that Rs 58,697 crore is being raised by PSBs, of which Rs 10,543 is through equity alone. are from.

with both

Banks (IOBs) and UCO Bank have pulled out of the Reserve’s prompt corrective action (PCA) framework, with the government hoping that these lenders will also be able to tap the markets soon.

“we expect

To exit the regulators plan by next quarter,” the official quoted above said.

Another government official said that while there may be no additional requirement for state run bank Due to the regulatory norms being met, the government can take a final call based on the stage at which the bank’s privatization efforts have reached.

“If they need to be supported to get better valuations, or some other allocation has to be done, that can be looked into,” the official said.

NITI Aayog has sent some shortlisted names to the Group of Ministers (GoM) for consideration of banks for privatization.

According to a recent report by rating agency, ICRA, state-run lenders may not require government-budgeted capital even for FY22. “However, it provides for any unforeseen events and will provide confidence to banks as well as investors and credit growth,” the report said.