Indian Overseas Bank and UCO Bank are under RBI’s prompt corrective action framework
Three loss making PSU Banks — Allahabad Bank, Indian Overseas Bank and UCO Bank – have received fresh capital infusion of Rs 8,655 crore from the government.
The Finance Ministry has approved infusing fresh capital amounting to Rs 2,153 crore in Allahabad Bank, Rs 2,142 crore in UCO Bank and Rs 4,360 crore in Indian Overseas Bank via preferential allotment of shares.
UCO Bank posted a loss of Rs 892 crore in Q2, Allahabad Bank a loss of Rs 2,103 crore and Indian Overseas Bank posted Rs 2,254 crore loss in the July-September quarter.
Indian Overseas Bank and UCO Bank are under the Reserve Bank of India’s prompt corrective action (PCA) framework and they need to have net NPA below six per cent to get out of PCA.
These banks filed separate regulatory filings on their capital infusion.
“We wish to inform that the Bank has received via letter on December 26 a sanction from Government of India for release of Rs 4,360 crore towards contribution of the Central Government in the preferential allotment of equity shares (Special Securities/Bonds) of the Bank during the financial year 2019-20 as Government’s investment,” Indian Overseas Bank said.
“Government of India, vide letter on December 26, conveyed their sanction for release of capital of Rs 2,142 crore towards contribution of the Central Government in the preferential allotment of equity shares of UCO Bank,” UCO Bank said.
These infusions are part of the Rs 70,000 crore recapitalisation announced in the Budget.
Finance Minister Nirmala Sitharaman had first proposed a capital infusion of Rs 70,000 crore in public sector banks in two phases. Of this amount, the government had so infused Rs 60,314 crore.
Source: NDTV Profit
