Capital Infusion: The government has taken a big step for the banks facing financial problems.Â
The government is giving capital infusion in weak banks like Central Bank of India, Punjab and Sind Bank. This capital has been infused through non-interest bearing bonds (recapitalization bonds), whose tenors are March 31, 2031 and March 31, 2036.
Capital Infusion: There is important news for bank customers. The government has announced 15 thousand crores for capital infusion in public sector banks in the current financial year.
Capital infusion will be done in weak banks like Central Bank of India, Punjab and Sind Bank. The government is trying to prepare these banks regulatory wise by giving capital infusion. The government will give this amount to those banks which have raised funds through non-interest bonds.
RBI raised question
The Reserve Bank has raised questions about such banks. It is worth noting that last month, Punjab and Sind Bank raised a fund of 4600 crores by issuing preferential shares. With the help of this, the bank was helped in the event of exit from PCA i.e.
Prompt Corrective Action. In Budget 2021, the government had announced a capital infusion of Rs 20,000 crore for public sector banks. But this time i.e. in Budget 2022, the government has reduced it to Rs 15,000 crore.
14500 crore capital infusion
Let us tell you that this capital infusion will be done with the help of non-interest bonds. It was started with Punjab and Sind Bank in the third quarter of the financial year 2020-221.
After that, capital infusion of 14500 crores was done in four other public sector banks – Bank of India, Indian Overseas Bank, Central Bank of India and UCO Bank.
In which bank did the government put how much capital?
This capital has been given mainly by the government to those banks, which are coming under the Reserve Bank’s Prompt Corrective Action Framework ie PCA Framework. Indian Overseas Bank, Central Bank of India and UCO Bank were released Rs 11,500 crore, while the remaining Rs 3000 crore was received by Bank of India.
According to the notification issued by the government, capital of Rs 4800 crore has been provided to Central Bank of India, Rs 4,100 crore to Indian Overseas Bank and Rs 2600 crore to UCO Bank of Kolkata.
How long is the bond’s life
The capital infusion from the government will help these banks come out of the Reserve Bank’s immediate corrective action framework. The capital has been infused through non-interest bearing bonds (recapitalization bonds) with tenures of March 31, 2031 and March 31, 2036. That is, banks will get help in financial reform from this.
