The Central government has decided to infuse Rs 10,086 crore into the Bank of India.
The bank informed the BSE in a regulatory filing on Saturday, 29 December, that the capital infusion in its equity will be done by way of preferential allotment.
According to the filing, the bank's board will consider "by way of circular resolution on or after 2 January 2019 the proposal for raising capital by this infusion and further issue of equity shares or securities at an appropriate time and other incidental matters thereat".
This comes after Finance Minister Arun Jaitley’s recent announcement that the government would infuse Rs 83,000 crore in public sector banks in the remaining part of the fiscal year.
Year’s Total Recap Breaches Rs 1 Lakh Crore
The move will take the total recapitalisation of banks during the year to Rs 1.06 lakh crore.
"Today we have asked for the parliamentary sanction for (issuing) additional recapitalisation bonds of Rs 41,000 crore... As of today, of the Rs 65,000 crore recapitalisation plan for 2018-19, Rs 42,000 crore is still remaining,” Jaitley had said after tabling the Supplementary Demands for Grants in the Lok Sabha.
“Therefore, with this additional Rs 41,000 crore, we will now have Rs 83,000 crore for the balance year and that will make this year’s recap to a total of Rs 1.06 lakh crore,” he added.
The second batch of Supplementary Demands for Grants for 2018-19 involving a gross spending of Rs 85,948.86 crore includes the package of Rs 41,000 crore for banks. It will not require any additional cash outgo as the capital infusion is planned through bonds.
Jaitley said the distribution process for the Rs 83,000 crore capital infusion in state-run banks will be decided on the basis of performance of banks by the Department of Financial Services (DFS). About Rs 23,000 crore have already been infused this fiscal.
Capital infusion will be done under four heads to help banks meet regulatory capital norms, help better performing banks under RBI's Prompt Corrective Action (PCA) to get out of it, facilitate non-PCA banks that are near the "red-line" and to strengthen amalgamated banks.
(With inputs from IANS)
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