The capital position of banks will be reviewed in the next quarter and investments will be made to meet regulatory requirements on need basis.
Sources said that in the current financial year so far, all the 12 public sector banks have made profits, which are being pledged back to strengthen the banks’ balance sheets.
Going forward, he said, the rise in stressed assets will determine the capital requirement.
Sources said that if we talk about the figures, then there are signs of gradual improvement in the financial condition of public sector banks.
Last month the Reserve Bank had removed
and from prompt corrective action Framework (PCAF), followed by reforms in various parameters and a written commitment that the state-owned lenders will adhere to the minimum capital norms.
However, the sole public sector lender is left under PCA Framework is Central Bank of India.
PCA begins when banks violate certain regulatory requirements such as return on asset, minimum capital and quantum of non-performing assets.
PCA restrictions in many ways incapacitate the bank to lend freely and force it to operate under a restrictive environment which becomes an impediment to growth.
In the last financial year, the government invested Rs 20,000 crore in five public sector banks. Of this, Rs 11,500 crore went to three banks – UCO Bank, Indian Overseas Bank and Central Bank of India – under PCA.
The government gave Rs 4,800 crore to Central Bank of India, Rs 4,100 crore to Indian Overseas Bank and Rs 2,600 crore to Kolkata-based UCO Bank.
The government has invested more than Rs 3.15 lakh crore in public sector banks.public sector banks) in 11 years through 2018-19.
In 2019-20, the government infused Rs 70,000 crore in PSBs to boost credit for a strong boost to the economy.