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Govt to infuse Rs 6990 cr in public sector banks

The central government will infuse Rs 6990 crore in nine public sector banks including State Bank of India, Bank of Baroda and Punjab National Bank in order to increase their capital and meet global risk norms. This will be the first tranche of capital infusion for which the government had allocated Rs 11,200 crore in the budget for 2014-15. SBI will get Rs 2970 crore, followed by Bank of Baroda Rs 1260 crore, Punjab National Bank Rs 870 crore and Canara Bank Rs 570 crore. A statement from the government said it has adopted new criteria in which the banks which are more efficient would be rewarded with extra capital so that they can further strengthen their position. The capital infusion has been decided based on the performance of the bank. Better the performance higher will be the infusion. The methodology for arriving the amount to be infused in these banks has been based on efficiency parameters. First of all, weighted average of return on assets for all PSBs for last three years put together was arrived at and all those who were above the average have been considered, it said. The second parameter that has been used is return on equity for these banks for the last financial year. Those who have performed better than average have been rewarded, it added. Among other banks, Syndicate Bank will get Rs 460 crore, Allahabad Bank Rs 320 crore, Indian Bank Rs 280 crore, Dena Bank Rs 140 crore and Andhra Bank Rs 120 crore. The government is in the process of deciding on remaining Rs 4,210 crore capital infusion. The entire fund infusion will be completed before March 31.

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