Govt to infuse Rs 10,086 crore in Bank of India

State-owned Bank of India Saturday said the government has decided to infuse Rs 10,086 crore in the bank as part of Rs 28,615 crore capital infusion to be done in about half a dozen public sector lenders. The finance Ministry had informed the bank about the capital infusion on Wednesday (December 26), Bank of India said in a regulatory filing.

The fund infusion would be by way of preferential allotment of shares, it said. The board of directors would be considering by way of circular resolution on or after January 2, 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.

According to sources, the government has decided to pump Rs 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds soon. Out of these seven PSBs, United Bank of India also announced about the capital infusion communication from the finance ministry.

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The government had earlier announced an infusion of Rs 65,000 crore in PSBs in 2018-19, of which Rs 23,000 crore has already been disbursed, while Rs 42,000 crore is remaining.

Earlier this month, Finance Minister Arun Jaitley said the government would put an additional Rs 41,000 crore in PSBs over and above what was announced earlier.

On December 20, the government sought Parliament’s approval for infusion of an additional Rs 41,000 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.

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Eleven out of the total 21 PSBs are under the RBI’s PCA framework, which imposes lending restrictions on weak banks. These are 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.