Raise Rs 60,000 cr: FM to banks

Public Sector banks will be asked to raise Rs 60,000 crore (Rs 600 billion) to meet credit needs in the next 5 to 6 years at a meeting of bank chairmen to be convened next month by Finance Minister P Chidambaram.

"Banks' capital have to be augmented every year for the next five years. My calculation shows that we require about Rs 60,000 crore of additional capital for the next 5 to 6 years," Chidambaram said.

"Where are we going to raise this capital. These are the questions that I pose to CMDs of PSU banks when I call them for the meeting after announcement of the first half results," he said.

PSU banks need additional Rs 8,000-9,000 crore (Rs 80-90 billion) of capital formation annually for the next five years if they continue to finance 30 per cent of GDP and the economy grows at the rate of 7 per cent each year, he said.

However, banks finance as much as 50 per cent of GDP in dynamic economies and even 70 per cent in some cases, he said.