The government today said Indian banks will require capital to the tune of Rs 5 lakh crore by March, 2018.
"...the broad level estimates of RBI, based on the data obtained from banks, suggest that by March 31, 2018 the total regulatory capital requirements of Indian banks would be to the tune of Rs 5 trillion; of which non-equity capital will be of the order of Rs 3.25 trillion while equity capital will be order of Rs 1.75 trillion," Minister of State for Finance Namo Narain Meena said in a written reply in the Rajya Sabha.
The broad level estimates also suggests that government's contribution to the equity capital of the public sector banks (PSBs) would be of the order of Rs 900 billion (Rs 90,000 crore) at the existing level of shareholding of the government in the individual PSBs, he said.
"These projections are based on the assumption of uniform growth in Risk Weighted Assets of 20 per cent per annum individually for all banks and individual bank's assessment of internal accruals (in the range of 1-1.2 per cent of Risk Weighted Assets)," he said.
The government is examining the capital requirement in the PSBs up to March 2018 and ways to meet the same, he added.
Meena also said that the Reserve Bank of India has informed that the actual quantum of capital to be required by Indian banks will depend on numerous factors such as economic growth, profitability of banks and extent of retained earnings, level of non-performing assets and growth in the capital markets etc.
Meanwhile, the government has made budget provision of Rs 15,000 crore for recapitalisation of banks in the current fiscal.
In 2010-11, the government pumped Rs 20,157 crore in public sector banks to maintain tier I capital at 8 per cent and increase the government equity in some banks to 58 per cent.
In the following fiscal, public sector banks got Rs 12,000 crore for improving their capital adequacy ratio.