Bank of India, Union Bank issue preferential shares worth Rs.3534 cr to Govt

Bank of India, Union Bank issue preferential shares worth Rs.3534 cr to Govt

Public sector lenders Bank of India and Union Bank of India have issued equity shares worth Rs.2,455 crore and Rs.1,079 crore, respectively, to the government on preferential basis for capital infusion.

“Consequent to the receipt of capital funds from government to the tune of Rs.1,079.99 crore, the bank has on 30 September 2015 issued and allotted 51,662,281 shares at an issue price of Rs.209.05 per equity share on preferential basis,” Union Bank said in a BSE filing on Saturday.

In a separate filing, Bank of India said it has allotted 127,004,655 equity shares to government on 30 September 2015. “Consequently, shareholding of government has increased from 64.43% to 70.13% and correspondingly, the non-government shareholding has decreased from 35.57% to 29.87%,” it added.

Bank of India will get a capital infusion of Rs.2,455 crore by way of increased government shareholding.

In August, the government had decided to infuse Rs.20,088 crore in 13 public sector banks, including State Bank of India, Punjab National Bank, IDBI Bank, Canara Bank and Corporation Bank. The government has laid out a road map for Rs.70,000 crore of capital infusion in public sector banks over four years. Of this, Rs.25,000 crore is marked for 2015-16 and 2016-17 each and Rs.10,000 crore for 2017-18 and 2018-19 each.

It is estimated that public sector banks will require capital of Rs.1.80 trillion over four years. Of this, banks will have to raise Rs.1.10 trillion from the market. As of now, the public sector banks are adequately capitalized and meeting all the Basel-III and RBI norms. However, the government wants to adequately capitalize all the banks to keep a safe buffer over and above the minimum norms of Basel-III.

Source :BankingUpdates.