Govt to pump Rs10,086-cr capital into Bank of India
31 Dec 2018
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The government plans to pump in a whopping Rs10,086 crore into bad loan-hit Bank of India (BoI), the worst performer among state-controlled banks as part of Rs28,615 crore capital infusion in about half a dozen public sector lenders.
In a regulatory filing, Bank of India said the finance ministry informed the bank about the capital infusion on Wednesday (December 26) on the fund infusion, which would be by way of preferential allotment of shares.
The board of directors of BoI would be considering by way of circular resolution on or after 2 January 2019, the proposal for raising capital by this infusion and further issue of equity shares at an appropriate time and other incidental matters, it said.
The recapitalisation, the finance minister said, would enhance the lending capacity of PSBs and help them come out of the Reserve Bank of India's Prompt Corrective Action (PCA) framework.
Out of these seven PSBs, United Bank of India (UBI) also informed regulatory authorities of the capital infusion plan announced by the finance ministry.
According to sources, the government has decided to pump Rs 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds soon.
The government had earlier announced an infusion of Rs65,000 crore in PSBs in 2018-19, of which Rs23,000 crore has already been disbursed, while Rs42,000 crore is remaining.
Earlier this month, Finance Minister Arun Jaitley said the government would put an additional Rs41,000 crore in PSBs over and above what was announced earlier. On December 20, the government sought Parliament's approval for infusion of an additional Rs41,000 crore.
The recapitalisation, the finance minister said, would enhance the lending capacity of PSBs and help them come out of the Reserve Bank of India's Prompt Corrective Action (PCA) framework.
Eleven out of the total 21 PSBs are under the RBI's PCA framework, which imposes lending restrictions on weak banks.
These include Allahabad Bank, United Bank of India, Corporation Bank, IDBI Bank, UCO Bank, Bank of India, Central Bank of India, Indian Overseas Bank, Oriental Bank of Commerce, Dena Bank and Bank of Maharashtra.
