The Union Cabinet cleared infusion of Rs.12,517 crore in about 10 Public Sector Banks (PSBs) during the current fiscal to boost their lending potential and also assist them in meeting the stricter capital adequacy norms under Basel-III.
Besides this, the Cabinet also gave an in-principle approval for providing need-based recapitalization of banks till 2018-19 for ensuring compliance with the Basel-III capital adequacy norms.
In previous years also, same kinds of measures were taken by the government when it infused about Rs.20,117 crore in PSBs during 2010-11 and poured in another Rs.12,000 crore in 2011-12 to comply with the capital adequacy norms.
Accordingly, keeping in mind the capital requirements in the coming years, the Cabinet gave an in-principle nod for need-based additional capital infusion in banks from 2013-14 to 2018 -19 to ensure compliance with Basel-III global banking norms aimed at minimizing financial risks.
Implementation of Basel-III capital regulations increases requirement of core equity capital by banks due to higher capital ratios. The Basel-III capital ratios will be fully phased in as on March 31, 2018.