India approves $1.34bln infusion in 5 PSU banks

Move to leverage infused amount to enable lending $16.8bln to productive sectors in the economy.

The government has cleared infusion of Rs 6,211 crore ($1.34 billion) into 5 PSU banks, a step which will assist in lending an extra Rs 77,637 crore ($16.8 billion) to different sectors of the economy.

The banks to receive capital infusion include Union Bank of India, Bank of Maharashtra, IDBI Bank, UCO Bank and Central Bank India.

An official statement said, “The five banks would be able to leverage this capital and lend an additional approximate amount of Rs 77,637 crore ($16.8 billion) to the productive sectors of the economy giving a push to all round economic activity besides paying additional dividends and tax revenues to the government.”

As per the release, IDBI Bank will receive Rs 3,119 crore ($674.42 million), Central Bank of India Rs 2,016 crore ($435.85 million), Bank of Maharashtra Rs 590 crore ($127.55 million), UCO Bank Rs 375 crore ($81.07 million) and Union Bank of India Rs 111 crore ($24 million).

With this decision, the government’s total capital assistance during the present fiscal will increase to Rs 8,911 crore ($1.93 billion), the largest in the current times, it said.

The capital infusion in IDBI Bank will be via the preferential placement of equity, while in Central Bank of India it will be via contribution to rights issue.

View the full story in Bank Bazaar.