Four PSBs jumpstart preferential issue process

Responding swiftly to Union finance ministry’s decision to infuse capital into public sector banks by way of preferential allotment of equity shares in favour of the government of India, four major PSBs on Saturday kickstarted the process of creating and issuing such shares to raise funds.

The board of directors of the four public sector lenders such as Indian Overseas Bank (IOB), UCO Bank, United Bank of India, and Corporation Bank have decided to initiate necessary steps to raise funds. The finance ministry in a February 15 letter had conveyed to the banks the government’s decision to infuse funds into certain public sector banks. As per the letter, while IOB would be getting Rs 1,054 crore; UCO Bank, Rs 940 crore; and United Bank of India, Rs 308 crore.

“We are working on the number of additional shares, which would be given to the government. As of December 31, 2010, the government holds 61.23% stake in the bank,” M Narendra, chairman and managing director of IOB, told FE. The bank has called for an extra ordinary general meeting on March 22.

While UCO Bank has scheduled its EGM for March 17, United Bank of India will hold it on March 23. The Corporation Bank will hold its EGM on March 15, for obtaining approval of the preferential allotment of equity shares.

While the Central government holds 63.59% in UCO Bank, it has 84.2% stake in United Bank of India. The Corporation Bank has 57.17% government holding.

The Central government had in October last announced the release of about Rs 8,700 crore to the PSU banks such as Bank of Baroda, Oriental Bank of Commerce, Andhra Bank, Dena Bank, IDBI Bank and Vijaya Bank.

Source: Financial Express