The government is likely to pump capital in during the last quarter of the current financial year to meet the regulatory requirements.
The government has made an allocation of Rs 20,000 crore for the state-owned in the budget 2021 - 22.
The capital position of would be reviewed in the next quarter and depending on the requirement, the infusion will be made to meet the regulatory needs.
All 12 have posted a profit in the current fiscal so far, which is being ploughed back to bolster the balance sheet of the banks, sources said.
Going forward, they said, the rise in stressed assets would determine capital requirement. If numbers are anything to go by, the sources said, the financial health of are showing gradual signs of improvement across the spectrum.
Last month, the Reserve Bank removed and from prompt corrective action framework PCAF following improvement in various parameters and a written commitment that the state-owned lender will comply with the minimum capital norms.
However, the only public sector lender left under the PCA framework is the Central Bank of India.
PCA is triggered when banks breach certain regulatory requirements such as return on asset, minimum capital, and quantum of non-performing asset.
PCA restrictions force the bank in several ways to lend freely and disable it to operate under a restrictive environment that turns out to be a hurdle to growth.
In the last financial year, the government infused Rs 20,000 crore in public sector banks. Out of this, Rs 11,500 crore had gone to three banks under the PCA - UCO Bank, Indian Overseas Bank and Central Bank of India.
The government infused Rs 4,800 crore in the Central Bank of India, Rs 4,100 crore in Kolkata and the Central Bank of India got Rs 2,600 crore. The government has injected over Rs 3.15 trillion into public sector banks PSBs in the 11 years through 2018 - 19.
In 2019 - 20 the government infused Rs 70,000 crore capital into PSBs to boost credit for a strong impetus to the economy.