PSBs maintain minimum CARR of 9%
The State Bank of India (SBI) has obtained approval for raising equity capital of up to Rs.20,000 crore from the market by way of Qualified Institutional Placement (QIP) or other modes till 31 March 2020, Lok Sabha was told on 8 July 2019.
The bank, as a public sector bank (PSB), has further informed that at present it is well capitalised, Minister of State for Finance & Corporate Affairs Anurag Singh Thakur said in a written reply to the house.
As per RBI guidelines, banks in India are required to maintain a minimum Capital to Risk-weighted Assets Ratio (CRAR) of 9%. As on 31 March 2019, all 18 Public Sector Banks (PSBs) meet this minimum CRAR requirement.
SBI has CRAR of 12.72% as on 31 March 2019 against regulatory requirement of 11.325%, and depending upon the requirement, it would decide on raising capital at an appropriate time during the financial year, said Thakur.
He was commenting on the Budget 2019-20 under which the Government has proposed to make provision for infusion of Rs.70,000 crore capital to PSBs to boost credit for a strong impetus to the economy.
PSBs source capital through internal capital generation, mobilisation of capital from markets, and infusion by the Government.
Thus, capital infusion by the Government complements PSB’s internal capital generation and mobilisation of capital from markets.
During the period from financial year (FY) 2008-09 to FY2018-19, PSBs have mobilised Rs.2,81,616 crore of capital through sources other than Government, and have posted net profit of Rs.98,373 crore, of which a sizeable proportion has contributed to internal capital generation.
During the same period, the Government has infused capital of Rs.315,721 crore in PSBs, said Thakur. Fiinews.com