The finance ministry is likely to infuse Rs 14,500 crore mainly in the banks that are under the Reserve Bank of India’s prompt corrective action framework in the next few days to improve their financial health.

Indian Overseas Bank, Central Bank of India and UCO Bank are under this framework that puts several restrictions on them, including on lending, on management compensation and on directors’ fees.

The ministry has almost finalised its names of probable candidates for capital infusion, sources say.

The infusion will be made in the next few days, say the sources, adding that the biggest beneficiary of this round of capital infusion would be the banks that are under the prompt corrective action (PCA).

The capital infusion will help these banks to come out of the RBI’s enhanced regulatory supervision or PCA framework.

Most of the large state-owned lenders, including State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India, and Indian Bank, have raised money from various market sources, including share sale on a private placement basis.

For the current financial year, the government had allocated Rs 20,000 crore for capital infusion into the state-run lenders for meeting regulatory requirements.

Among the 12 public sector banks (PSBs), Punjab and Sind Bank was given Rs 5,500 crore last November. Parliament had in September approved Rs 20,000-crore capital infusion in the PSBs as part of the first batch of Supplementary Demands for Grants for 2020-21.

Earlier this week, LIC-controlled IDBI Bank was removed from the RBI's PCA framework after a gap of nearly four years on improved financial performance.

The Reserve Bank of India (RBI) had placed IDBI Bank under the PCA framework in May 2017, after it had breached the thresholds for capital adequacy, asset quality (net NPAs was over 13 per cent in March 2017), return on assets and the leverage ratio. The performance of IDBI Bank was reviewed by the Board for Financial Supervision (BFS) in its meeting held on February 18, 2021.

It was noted that as per published results for the quarter ending December 31, 2020, the bank is not in breach of the PCA parameters on regulatory capital, net NPA and leverage ratio, the RBI had says.