The government plans to allow three public sector banks- United Bank of India as well as Dena Bank and Bank of Maharashtra to tap markets in order to boost their capital base so that they can lend more. In order to boost the capital base, the government will infuse around Rs 1,700 crore in the paid-up equity capital of these banks by the end of this fiscal. For the capital infusion, the government has already worked out a rough estimate. While UBI will be allocated Rs 700 crore while the rest Rs 1,000 crore will be distributed between Dena and Bank of Maharashtra.
The government may raise capital in the tier-I category though various instruments in two tranches. However, there is still some gap left even after the government''s capital infusion. Therefore all options are evaluated including the public issue.
The three public sector banks may also be allowed to raise money through other methods, such as qualified institutional placements, if the market scenario doesn''t improve soon.
Earlier, Bank of India had raised Rs 1,360 crore through issue of 3.78 crore shares at a price of Rs 360 per share through QIP in 2007.
Currently, United bank of India (UBI) is wholly owned by the government, while in Maharashtra Bank, the government holds 76% stake and in Dena bank it holds 51% stake. However, the government will continue to hold a majority stake in all public sector banks.
The government may raise capital in the tier-I category though various instruments in two tranches. However, there is still some gap left even after the government''s capital infusion. Therefore all options are evaluated including the public issue.
The three public sector banks may also be allowed to raise money through other methods, such as qualified institutional placements, if the market scenario doesn''t improve soon.
Earlier, Bank of India had raised Rs 1,360 crore through issue of 3.78 crore shares at a price of Rs 360 per share through QIP in 2007.
Currently, United bank of India (UBI) is wholly owned by the government, while in Maharashtra Bank, the government holds 76% stake and in Dena bank it holds 51% stake. However, the government will continue to hold a majority stake in all public sector banks.
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