The Government have announced their intention to recapitalize Public Sector Banks to enable them to maintain comfortable level of CRAR for supporting the credit requirement of the productive sectors of the economy. The Cabinet has, as a part of the on-going process, approved the infusion of capital into Central Bank of India (Rs. 1400 crore), UCO Bank (Rs. 1200 crore) and Vijaya Bank (Rs. 1200 crore). The Government will be subscribing to the Tier-I innovative capital instruments which banks will float in two branches. The first tranche in 2008-09 is expected to be of the order of Rs.1650 crore.

Bank recapitalization through government subscription to Tier I instruments to restore capital adequacy and support lending. The Government will subscribe to Tier-I innovative capital instruments floated by public sector banks to bolster CRAR and support credit to productive sectors; targeted capital infusions have been authorized for Central Bank of India, UCO Bank and Vijaya Bank, to be raised in two tranches with an initial tranche in the current fiscal period.