* To inject max. 150 bln rupees into state-run banks
* State banks hit by higher bad loans, write offs
* Govt to take steps to improve stressed sectors
(Adds details, comments, background)
NEW DELHI/MUMBAI, Nov 15 (Reuters) - The government will
decide in the next few weeks how much additional capital will be
injected into state-run banks after determining most of these
lenders will need additional funds, Finance Minister P.
Chidambaram said on Thursday.
However, the combined injection of capital will not exceed
the 150 billion rupees ($2.73 billion) provisioned in the budget
for the fiscal year ending in March 2013, Chidambaram added in a
news briefing after meeting the heads of public sector lenders.
Even at the maximum, the amount injected would fall short of
the public banks' capital requirements. India's central bank
said in September the government needs to infuse 900 billion
rupees into state-run banks to meet the upcoming Basel III
India's state-run banks are faced with rising non-performing
assets (NPA) and write-offs because of poor lending decisions,
and as companies struggle to pay off loans in a slowing economy.
"At least most banks will require additional capital. We
will budget a provision for infusing additional capital and that
decision will be taken in the next few weeks," the minister
The top three banks that need the most capital are Indian
Overseas Bank, Central Bank of India and Bank
of Maharashtra, Chidambaram said. Shares in the three
lenders rose between 1-2 percent each on Thursday.
Chidambaram estimated state banks' bad loans rose by 0.98
percent at the end of September, compared with the same month a
"NPAs is a problem. That is a reflection of the slowdown in
the economy," he told reporters.
Chidambaram added the government will take steps to improve
sectors such as textiles, steel, infrastructure, construction
and telecom infrastructure that are at the root of the bad loans
at public sector banks. He did not provide details.
India's economy is likely growing at its slowest pace in a
decade, and the government is under pressure to pass policy
reforms to improve growth and keep its fiscal deficit under
Chidambaram has signalled the government is seeking to keep
the fiscal deficit at 5.3 percent for the fiscal 2012/13 year,
slightly wider than the 5.1 percent targeted in March.
($1 = 54.9700 Indian rupees)
(Reporting by Rajesh Kumar Singh and Swati Pandey; Editing by
Rafael Nam and Sanjeev Miglani)