"We have received capital requirement proposals from all public sector banks and are evaluating their proposals at the moment. Hopefully, capital allocation to banks would be finalized by August-end," an official source said.
Thereafter, fund allocation will be done to individual banks by issue of preferential shares, sources said, adding rights issue is not a favourable option at the moment as stock prices are very low, sources added.
Government's holding will increase if capital infusion is through preferential allotment of shares. Banks can explore other routes when conditions are conducive and the government will also get better return on its stake dilution, sources said.
Last month, Finance Minister P Chidambaram had said that all public sector banks are meeting Basel III requirements for capitalization, though four of them -- Indian Overseas Bank, IDBI Bank, Bank of Maharashtra and Dena Bank -- have Tier-1 capital below 8 percent.


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