Interim budget 2014: Rs 11,200-crore capital infusion may be too low, says SBI

State Bank of India (SBI), the country's largest lender, on Monday said the Rs 11,200-crore budgetary allocation for state-run banks' recapitalisation for the next fiscal year (FY15) may not be sufficient given the systemic credit growth and migration to the capital-intensive Basel-III framework.. "The proposed provision of Rs 11,200 crore for capital infusion in public sector banks may not be sufficient," SBI chief economic adviser Soumya Kanti Ghosh said in a note.. The bank expects the system's credit to grow 16-17 per cent during FY15, he said, while having already decided to implement the Basel-III norms, the core tier-I capital adequacy requirement is also expected to rise by 0.50 to 7 per cent by 2015.. The Rs 11,200-crore fund infusion announced by Finance Minister P Chidambaram on this day is one of the lowest in recent years.. (Read: All you want to know about interim budget 2014). Mr Ghosh also said the target to increase credit to agriculture by Rs 1 trillion in FY15 to Rs 8 trillion is a difficult given the historical data.. "It is observed that agriculture and allied GDP grows higher in one year and relatively low in the following year, may be due to base effect or monsoons," he said.. The agri GDP grew 1.9 per cent in FY13 and is expected to grow to 5 per cent in FY15, he said. If it "grows lower in FY15, it would be difficult for banks to achieve agricultural credit target", he added.. Additionally, the growing NPAs will also make it difficult for banks to achieve the targeted growth in farm lending, he said.. However, Mr Ghosh welcomed the budget announcements on education loans and cutting of excise duties. Government will be picking the interest tab for educational loans given till March 2013.. "This particular provision augurs well for banks to regularise educational loan accounts which went irregular due to loss of growth momentum in the economy and decline in job opportunities," Mr Ghosh said.. On the decision to cut excise duties on automobiles, he said banks may look at a revival in auto loans segment, which has been hit due to the sluggish demand for automobiles.

Interim budget 2014: Rs 11,200-crore capital infusion may be too low, says SBI

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