The Department of Financial Services (DFS) had given ₹8,800 crore to the State Bank of India (SBI) as part of a recapitalization exercise without the country’s biggest lender asking for such funds in FY18, said a CAG report presented in Parliament on Monday.
The department under the finance ministry did not conduct an assessment of the capital requirement as per its own standard practice before recapitalization, as per the Compliance Audit Report No. 1 of 2023 of the Comptroller and Auditor General of India on Union Government (Economic and Service Ministries – Civil) for the year ended March 2021.
The report stated that DFS infused ₹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 and it did not conduct an assessment of the capital requirement as per its own standard practice before recapitalization.
It further said that DFS considered cushion over and above the norms prescribed by the Reserve Bank of India (RBI) while recapitalizing PSBs, according to the news agency PTI.
“RBI had already prescribed enhanced capital requirement of an additional 1 percent on banks in India. This resulted in an excess infusion of ₹7,785.81 crore,” the report said.
The report added that DFS infused ₹831 crore into Bank of Maharashtra in 2019-20 against the bank’s demand of ₹798 crore to avoid the surrender of funds amounting to ₹33 crore, as per PTI reports.