The government said it will decide this week on the Rs 15,000-crore capital infusion in public sector banks to shore up their capital base.
“This week there will be some announcement about the allocation (to various banks),” Department of Financial Services Secretary D.K. Mittal said here.
“Allocation of the funding will be decided and rest I think the process still has to go through,” he said.
Asked if the capital infusion would be done through rights issue, he said it has to be first approved by respective boards and then the Finance Ministry will take a view on that.
“If there is rights issue, there is scope for anybody to go in...LIC is not a short-term investor,” he said to a query if LIC will be asked to subscribe to the rights issue.
“May be LIC will also make money by selling some of the equities when they come to the market,” he added.
He said the government has made budget provision of Rs 15,000 crore for recapitalisation of banks in the current fiscal. The top three banks which require capital are Indian Overseas Bank, Central Bank of India and the Bank of Maharashtra. State Bank of India would also need capital, he said.
All but Dena Bank have tier-I capital of above 8 per cent well above Basel norms.
Holding company
Asked about holding company structure, Mittal said the Reserve Bank of India has given its feedback and the Finance Ministry is analysing it.
“RBI has broadly agreed on this... However, there is a need to look at regulatory platform because it would be such a large conglomerate (holding company) and how to be regulated.
What kind of capital adequacy it should have,” he said.
“Broadly, they (RBI) said we support this view...the government is yet to take a view on (holding company structure for the public sector banks),” he said.
The 2012-13 Union Budget had proposed setting up of a financial holding company that would help raise resources to meet capital needs of state-owned banks.