The finance ministry of India has accepted offer for adding Rs. 7,577 crores within six weeks in the public-sector banks or PSBs as part of the recapitalization plan to strengthen their capital adequacy ratio. All these public-sector banks, which got capital funding, are now being given prompt remedial act of the Reserve Bank of India.
This funding comes under Indradhanush plan of the Government of India, which promised Rs. 70,000 crores over period of four years ending March 2019. The lenders who will receive capital through the issue of preferential shares include the Bank of India, IDBI Bank and UCO Bank. The actual fund infusion will take place in the next few weeks after the banks get their necessary regulatory approval, which includes permission from the shareholders.
Kolkata based UCO Bank today declared the sanction of the board for the proposal to issue equity shares on privileged basis to the government against the capital contribution of Rs. 1,375 crores, which is subject to necessary agreement. The Central Bank of India also said that the capital raising committee of the board which permitted the raising of equity capital by allotting up to 3.88 crore shares at the issue price of Rs. 83.15 per unit comes to an aggregate of Rs. 323 crores.
The government now has decided to add Rs. 2,257 crores in the Bank of India, Rs. 2,729 crores in IDBI Bank, Rs. 650 crores in Bank of Maharashtra, and Rs. 243 crores in Dena Bank. Arun Jaitley, the finance minister in October had also declared Rs. 2.11 lakh crores 2-year road map to reinforce the PSBs which is reeling under high non-performing assets (NPAs) or bad loans. As per sources, the government is also in the process of working out the agenda for issuing the recapitalization bonds and aims to strengthen the state-owned banking sector.