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The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, today gave its approval for allowing Public Sector Banks (PSBs) to raise capital to meet their additional capital requirements under BASEL-III by diluting Government holding upto 52 percent in a phased manner.

Out of 27 PSBs, Government of India controls 22 through majority holding. In the remaining 5 banks, SBI holds majority stake. These 27 PSBs control 70 percent of total branches, deposits and credit in the Indian banking system. Gol has regularly been infusing incremental capital in PSBs.

Basel-Ill capital adequacy norms will be fully phased in and applicable by 31.3.2019. Capital requirements of banks have increased under Basel-Ill.

As per Basel-Ill norms the minimum Tier-1 has to be 7 percent. In addition, Banks require another 2.5 percent of Common Equity as Capital Conservation Buffer. In all, Banks need a total of 9.5 percent. The quantum of capital support needed by banks is huge, which cannot be funded by budgetary support alone. The main concern of Gol primarily pertains to Common Equity Tier-I capital of 5.5 percent.

Going by past trends if we take average Gross Domestic Product (GDP) growth rate for the next five years as 6.5 percent and dividend pay-out ratio as 20 percent as percentage of net profit or 0.80 of risk weighted assets and credit growth rate at 18 percent and further RWAs growth at 16 percent, the total capital would be Rs.4,60,120 crore (Rs.2,39,720 crore Common Equity Tier-I) (Rs. 1,55,900 crore Additional Tier-I) and (Rs.64,500 crore Tier-II).

The total support provided to PSBs towards capitalisation during the last four years stands at Rs.5 8,634 crore. The provision for the current year is at Rs. 11,200 crore and the total market cap of Government shareholding as on 30.5.2014 stands at Rs.4,19,711 crore.

If the PSBs are permitted to bring down GOI holding to 52 percent in a phased manner, they can raise upto Rs.1,60,825 crore from the market. Gol budgetary support needed for 2015-19 would be Rs.78,895 crore only, which will maintain Gol holding at 52 percent. However, as Govt. is likely to receive an amount of Rs.34,500 crore from PSBs as dividend, the net outgo will only be Rs.44,395 crore.

While permitting banks to raise capital from the market, the banks would be advised to preserve the Government holding at minimum 52 percent and increase the public shareholding in a phased manner through the issue of shares largely to retail investors that is to common citizens of this country.

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PM Modi addressed two mega rallies ahead of fourth phase of election in West Bengal’s Siliguri and Krishnanagar. “The entire North Bengal has announced that TMC government is going and BJP government is coming. Today, the entire nation is proud to see the willpower of the people of Bengal. This willpower is of the ‘Ashol Poriborton’. This willpower is the strength of ‘Sonar Bangla’,” he said in Siliguri rally.

Expressing anguish over Cooch Behar incident, PM Modi said, “What happened in Cooch Behar is very saddening. My sympathies are with the families of those who died, I condole their demise. Didi and her goons are perturbed, seeing the people's support for BJP. She has stooped to this level as she can see her chair slipping away.”

Reacting to the violence in Cooch Behar, he also said, “Didi, this violence, tactics of instigating people to attack the Security Forces, the tactics of obstructing the polling process will not protect you. This violence can't protect you from the 10 years of your ill-governance.”

Amidst the fourth phase of West Bengal Assembly polls, the Prime Minister asserted, “I saw a video on social media. In it, the tourism minister of Bengal who is close to Didi is threatening the people of the state, saying if people voted for BJP, people will be thrown out of the Bengal. Will you accept this language, such sort of threat?”

Accusing Mamata didi for not showing her 10 years report card of her governance, PM Modi remarked, “Didi's goons are not able to do 'chhappa votes' this time around and thus, Didi is angry. She never presented her report card for 10 years. She should be giving the account of her works, her nephew's works and her goons' works.”

PM Modi, who has been relentlessly campaigning in West Bengal during assembly elections, hit out at Mamata Banerjee for her government’s patronage to syndicates, tolabaazs and cut-money mafias during a rally in Siliguri.

“It's time to change the kind of political environment, that has been created in Bengal for past several decades. 'Tolabaaj mukt' Bengal will be formed now. 'Syndicate mukt' Bengal will be formed now. 'Cut money mukt' Bengal will be formed now,” he added further.

Talking about TMC leader Sujata Mondal who made disparaging comments against the Dalit community. PM Modi without taking name said, “The thinking of Didi and TMC leaders is coming out in the open. A video is going viral on social media where a leader close to Didi can be seen blatantly accusing the Scheduled Caste community of Bengal as ‘beggars by nature’.”

In Siliguri, PM Modi accused Didi for not giving even tap-water to the people of Bengal, he said, “She did not provide irrigation water in the fields. But the rivers here were handed over to the mafias. Every scheme has tolabaz, every scheme has cut-money. A few days ago in Siliguri, Didi said that her tolabaaz only take 100-500 rupees, what is the big deal in this?”

Exuding confidence of forming the BJP government in the state, the PM stated, “In Bengal, after we form the government, you will be provided all benefits and schemes without cut money. The BJP government in Bengal will work on lines of how we worked during COVID lockdown. The Central government sent thousands of crores to everyone during the lockdown. The BJP government in Bengal will work with the same transparency.”

In Krishnanagar’s rally, the Prime Minister said, “After a wait for decades, the 'mahayagya' of 'ashol poribortan' has started in Bengal. This 'mahayagya' will teach a lesson to appeasers. After years of bloodshed, fear, atrocity and goondaism, Bengal will now walk towards peace and progress to fulfil the vision of 'Sonar Bangla'. This land will be freed of mafia, cow traffickers and infiltration.”

“The BJP has come into existence with the blessings of Dr Syama Prasad Mookerjee,” PM Modi said. The Prime Minister added that his party is fortunate that the people of Bengal are going to give them the opportunity to serve Bengal.

Taking a jibe at Chief Minister Mamata Banerjee, PM Modi said, “Seeing defeat, she has decided to do politics outside Bengal. The Varanasi thing has not been come out like this. That is, after the election, Didi will take an exit and the nephew will stake claim to play a new Khela in Bengal. This is also a game, which the people of Bengal have to understand.”

PM Modi slammed TMC supremo for abusing EC, CAPF, EVM, he asserted, “Didi abuses EC, CAPF, EVM.. to the extent, that Didi is abusing her own party's polling agents now. She is so desperate that she is defaming Bengal's voters. Didi, o Didi! People of Bengal don't expect you to have sensitivity any more.”

The Prime Minister criticised the ruling Trinamool Congress government, he alleged, “What did TMC government give to the youth of Bengal - unemployment, riots, lathis, and now, insults. Even the minority classes that Didi continued to serve are also at distress due to cut money and syndicate.”

Touting “double engine ki sarkar” as the best option for voters the Prime Minister said, “I request all young karyakartas to help spread the word of ‘ashol poriborton’ to their families and neighbours. He ended his speech with an appeal to voters to press the button for the lotus flower in upcoming elections. “In every seat and in every booth you just have to remember one thing ‘Ebar kamal chap, TMC saaf” the Prime Minister said.