India plans injecting $2.1bln in public sector banks

Amount to be infused in Q1 prioritising lenders with 8% or above CAR.

India will provide Rs 9,500 crore ($2.1 billion) for recapitalisation of public sector banks in the first quarter next year, while about Rs 7,000 crore ($1.54 billion) will be infused during the rest of the financial year 2010-11.

In the Union Budget last month, the government had proposed to infuse Rs 16,500 crore ($3.64 billion) into public sector banks to help them maintain a comfortable capital adequacy ratio (CAR).

R Gopalan, secretary, Department of Financial Services, said banks which did not have a CAR of 8 percent or above would get priority. Bank of Maharashtra, Allahabad Bank, Central Bank of India, Dena Bank, Indian Overseas Bank, Syndicate Bank, UCO Bank, Vijaya Bank, Canara Bank and IDBI Bank are likely to benefit from the move.

"We will withdraw the World Bank loan in April or May. We will try to give it to banks as soon as possible after taking the Cabinet approval. Another loan of $1.2 billion will come later," he said, adding the government had not yet signed an agreement with the global lender for the second loan. The two World Bank loans add to Rs 14,500 crore ($3.20 billion) approximately.

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