On Wednesday the Finance Ministry allowed public sector banks (PSBs) to raise funds from the market to meet their capital requirements.
“Approvals have been given in 2014-15 to seven PSBs to raise capital from the market,” said a finance ministry release.But it did not provide further detalis.
Explaining the decision, financial services secretary Hasmukh Adhia said, “The government doesn’t have space to give Rs 20,000 crore or 25,000 crore (for capital infusion). If banks require … they have other means to raise capital including raising from market.”
The statement did not disclose the names of the banks which have got government approval for raising capital through market.
The decision of government to reduce the shareholding of public sector banks to 52 per cent would also give these banks headroom to raise capital from the market.