SBI received Rs 8,800 crore from Government for recapitalization, even though it did not need it, says CAG

28 Mar 2023 , 01:50 AM

The Department of Financial Services (DFS) has given amount of Rs 8800 crore to India’s largest public sector lender State Bank of India without asking, said Comptroller and Auditor General of India (CAG) report presented in Parliament on Monday. 

As per the report, department under Finance ministry did not conduct the assessment of the capital requirement as per its own standard practice before recapitalization. The government does recapitalization of public sector banks for meeting the requirement for regulatory capital and for equipping better performing lenders placed under Reserve Bank of India’s Prompt Corrective Action framework to come out of it and meeting capital requirement on account of amalgamation.

‘DFS infused Rs 8,800 crore into SBI in 2017-18 for credit growth considering it the largest PSB in the country even though there was no demand. DFS did not conduct assessment of the capital requirement as per its own standard practice before recapitalization,’ CAG report said.

‘RBI had already prescribed enhanced capital requirement of additional 1 per cent on banks in India. This resulted in excess infusion of ₹ 7,785.81 crore,’ it added.

DFS had also infused Rs 831 crore into Bank of Maharashtra in 2019-20 against the bank’s demand of Rs 798 crore to avoid surrender of funds amounting to Rs 33 crore, the report.