Government releases second tranche of recapitalisation money to PSBs

In the past few days many of the PSBs (public sector banks), in a stock exchange filing have informed about receiving communication from government on new capital infusion by way of preferential allotment.

Bank of India informed BSE that the Government of India has conveyed its approval to infuse capital funds to the tune of Rs. 1150 crore in the bank by way of preferential allotment of equity shares in favour of Government of India.

Allahabad Bank also in another filing informed BSE that the bank has received a communication dated March 28, 2016 from the government, to infuse capital funds to the tune of Rs. 690 crores in the Bank.

In a separate disclosure Central Bank of India, United Bank of India and Vijaya Bank has informed BSE that the Government through Ministry of Finance letter dated March 28, 2016 conveyed its decision to infuse capital funds to the tune of Rs. 535.00 crore, 480 crores and Rs 220 crore respectively by way of preferential allotment of equity in favour of the Government of India.

State-run banks Syndicate Bank and UCO Bank are issuing shares to the government on a preferential basis to raise a total Rs 1,675 crore. UCO Bank will raise Rs 935 crore and Syndicate Bank will raise Rs 740 crore through allotment of preferred shares to the government.

The capital raising is part of the government's Rs 25,000 crore capitalisation plan earmarked for the current fiscal. Recently, the Reserve Bank of India (RBI) amended some regulatory capital determination principles to bolster the public sector banks' tier 1 capital. The capital raising is expected to be done in this week itself, as the fiscal year comes to an end on March 31.

Responding to the capital infusion plans, PSB banking stocks were trading in green, with gains in the range of 1 to 1.5 per cent on NSE.