NEW DELHI, July 19: Scam-scarred Indian Bank is unlikely to receive more than Rs 1,000 crore as recapitalisation funds this fiscal.

The Department of Banking, sources say, will determine the precise amount after the bank management presents its revival package, though it was improbable that capital infusion would exceed Rs 1,000 crore. Indian Bank has finalised a revival package which envisages capital infusion of Rs 1,600 crore in this financial year even as it needs Rs 2,100 crore for a turnaround.

The Banking Department has agreed to infuse Rs 300 crore in United Commercial Bank (Uco) after the management presented its recast package.

Indian Bank, the officials said, would require much more. The finance ministry, sources said, would weigh the revival package before it fixes the exact amount. Since capital infusion calls for Parliament approval, care is taken before the House is approached. The nod will be sought in the form of supplementary demands for grants during 1997-98. The government's recapitalisation drive, initiated by former finance minister Manmohan Singh as part of the reforms in the financial sector, has been criticised by the standing committee on finance, prompting the ministry to be more circumspect.

The finance ministry earlier quantified recapitalisation funds in the budget. No provision was, however, made this year since it was expected that the nationalised banks would be able to achieve the capital adequacy of 8 per cent by March 1997.

Sources said the capital infusion in the two nationalised banks would occur towards the close of the financial year. This, because the funds had to be invested in bonds on which the interest is paid by the government. A delay in recapitalisation would save the government interest expenses. Indian Bank is expected to present the revival plan to the finance ministry soon.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.