Government infuses Rs.6,211 crore in five state-run banks

New Delhi, June 12 (IANS) The government Saturday approved capital infusion of Rs.6,211 crore in five state-owned banks to help maintain their capital adequacy and increase lending capacity.

The five banks are Bank of Maharashtra, Central Bank of India, IDBI Bank, UCO Bank and Union Bank of India.

Capital adequacy ratio is the ratio which determines the capacity of the bank in terms of meeting the time liabilities and credit and operational risks.

These banks would be able to leverage this capital and lend an additional amount of about Rs.77,637 crore to productive sectors, giving a push to the all-round economic activity, besides paying additional dividends and tax revenues to the government, a finance ministry statement said.

The government would inject Rs.590 crore into Bank of Maharashtra through the perpetual non-cumulative preference shares (PNCPS) route.

Central Bank of India will get Rs.2,016 crore through a rights issue to which the government will subscribe.

IDBI Bank will receive Rs.3,119 crore by way of preferential placement of equity.

UCO Bank will get Rs.375 crore and Union Bank of India Rs.111 crore through the PNCPS route.

The government said it was giving the funds on certain conditions and would closely monitor the performance of these banks so that they continue to maintain the desired capital adequacy and improve performance.

The government move is part of the budgetary promise to provide Rs. 16,500 crore to ensure that these public sector banks are able to attain a minimum 8 percent Tier-I capital by March 31, 2011.

In the last four months, the government has put in Rs.8,911 crore, the highest capital infusion in the public sector banks in recent times.

The government had infused Rs.1,500 crore in four public sector banks in May 2010 and Rs.1,200 crore in three others in March 2010.

Central Bank of India, Vijaya Bank, UCO Bank and United Bank of India had been infused with Rs.1,900 crore in 2009, after the government subscribed to their Tier-I capital instruments.

In 2009, Central Bank of India got Rs.700 crore, UCO Bank — Rs. 450 crore, Vijaya Bank — Rs. 500 crore and United Bank of India — Rs.250 crore.

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