Centre gets green signal to infuse 7,577cr in 6 state- owned banks

New Delhi, Jan. 3: The finance ministry has approved proposal for infusion of ` 7,577 crore in 6 weak public sector banks ( PSBs) as part of the recap plan to bolster the capital adequacy ratio.

All these banks, which got capital support, are under prompt corrective action of RBI.

The funding comes under Indradhanus plan of the government which promised ` 70,000 crore over period of four years ending March 2019.

Lenders, which will receive capital through preferential issue of shares, include Bank of India, IDBI Bank and UCO Bank. The actual fund infusion will take place in the next few weeks after they get necessary regulatory approval, including nod from shareholders.

UCO Bank on Wednesday announced approval of board for the proposal to issue equity shares on preferential basis to the government against capital contribution of ` 1,375 crore subject to approval.

Besides, Central Bank of India said the capital raising committee of the board approved raising of equity capital by allotting up to 3.88 crore shares at the issue price of ` 83.15 per unit aggregating to ` 323 crore.

At the same time, the government has decided to infuse ` 2,257 crore in the Bank of India, ` 2,729 crore in IDBI Bank, ` 650 crore in Bank of Maharashtra, and ` 243 crore in Dena Bank.

While the Centre decides the mode for recapitalisation of all state- run banks, it advanced the release of funds to these six banks to help them meet their equity requirements and enable them to resume normal business and help

them come out of prompt corrective action.

The finance minister in October had announced an unprecedented ` 2.11 lakh crore two- year road map to strengthen PSBs, reeling under high NPAs. The NPAs have increased to ` 7.33 lakh crore as of June 2017, from ` 2.75 lakh crore in March 2015. The plan includes floating bonds of ` 1.35 lakh crore and raising ` 58,000 crore from the market by diluting Centre’s stake.