The government has infused Rs 14,500 crore, mainly into banks that are under the RBI”s prompt corrective action framework to improve their financial health.
Indian Overseas Bank, Central Bank of India and UCO Bank are currently under this framework that puts several restrictions on them, including on lending, management compensation and directors” fees.
Of the total infusion, Rs 11,500 crore has gone to these three banks while the remaining Rs 3,000 crore has been infused into Bank of India.
According to a government notification, Rs 4,800 crore has been provided to Central Bank of India, Rs 4,100 crore to Indian Overseas Bank and Kolkata-based UCO Bank has got Rs 2,600 crore.
The capital infusion will help these banks to come out of the Reserve Bank of India”s prompt corrective action framework.
The fund infusion has been done through non-interest bearing recapitalisation bonds with maturity varying between March 31, 2031 and March 31, 2036.
The investment in the special securities by public sector banks would not be considered as an eligible investment which is required to made in government securities in pursuance of any statutory provisions or directions applicable to the investing bank, it said.
Most of the large state-owned lenders — including State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India, and Indian Bank — have already raised money from various market sources, including share sale on a private placement basis.
For the current financial year, the government had allocated Rs 20,000 crore for capital infusion into the public sector banks for meeting regulatory requirements.
Punjab & Sind Bank was given Rs 5,500 crore in November last year.
Separately, Central Bank of India and Bank of India informed stock exchanges about the fund infusion by the government.