Nationalised banks with the government holding closer to the floor of 51 per cent are likely to receive the capital infusion support.
"About Rs 10,000 crore will be enough to infuse capital in public sector banks (other than SBI) as only some of them are closer to the threshold limit of 51 per cent," a government official said.
According to an internal estimate, ten nationalised banks with less than 60 per cent government stake would have to raise Rs 14,700 crore (Rs 147 billion) of equity to meet the additional capital requirements for growth as well as to meet more stringent capital allocation under the revised Basel-II norms.
Bank of Baroda would have to meet the new Basel-II capital norms from March 2008 and the others from March 2009 onwards. SBI would be raising Rs 16,700 crore through a rights issue in early 2008.
The government, which owns a controlling 59.73 per cent stake in the bank, would invest Rs 10,000 crore via the rights issue to maintain its stake in the bank at the current level, the government official said.
SBI would receive another Rs 6,700 crore (Rs 67 billion) if all its non-government shareholders subscribe to their entitlements in the rights issue.
"The Union Cabinet is likely to take up the rights issue proposal at its meeting next week," the official said, adding that "the government may issue tradeable bonds worth Rs 10,000 crore to SBI to subscribe to the rights issue."
Out of the total banking business in the country, the share of all public sector banks is 74 per cent, while SBI and its seven associate banks command about 25 per cent share.