IOB to get Rs 1,054 cr capital infusion from govt.

State-owned Indian Overseas Bank (IOB) said the government has decided to infuse Rs 1,054 crore into the bank as part of recapitalisation package.

The capital infusion is aimed at shoring up equity base of the bank to enhance lending to productive sectors of the economy.

The government has decided to infuse Rs 1,054 crore into the bank by way of preferential allotment of the equity, IOB informed the Bombay Stock Exchange in a filing.

During the year, the government has approved capital support for 8 public sector banks and more banks are likely to get infusion soon.

Other lenders who would get funds from the government includes UCO Bank, United Bank of India, Corporation Bank, Dena Bank, Allahabad Bank, Bank of Maharashtra and Vijaya Bank.

It is to be noted that Finance Minister Pranab Mukherjee announced capital infusion of Rs 15,000 crore into public sector banks during the current fiscal to ensure that these entities are able to attain a minimum 8 per cent Tier-I capital by March 31, 2011.

As part of recapitalisation, the government had infused Rs 6,211 crore into five banks. The banks, which had got capital support from the government in the first tranche included Union Bank of India, Bank of Maharashtra, IDBI Bank, UCO Bank and Central Bank India.

Besides, the government also approved additional capital infusion of Rs 6,000 crore in 10 public sector banks with an objective to raise its holding to a minimum 58 per cent in all state-run banks.

The proposed capital infusion is to enhance the lending capacity of the state-owned banks to meet the credit requirement of the economy in order to maintain and accelerate the economic growth momentum.

Source: FinancialExpress