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PSU banks to raise Rs.50,000 cr.
Why in the news ?
- Public sector banks are planning to tap the markets to raise more than Rs 50,000 crore this fiscal to shore up their capital base for business growth and meeting regulatory global risk norms.
More on news
- Out of 21 public sector banks, 13 have already taken the approval of their boards or shareholders for raising capital through the equity market.
- Capital is very much required for these banks as they are saddled with non-performing assets (NPAs) of about Rs 10 lakh crore.
- The combined value of the share sale of these banks is upwards of Rs.50,000 crore.
- Leading the pack is the Central Bank of India, which has already got shareholders’ approval for raising Rs.8,000 crore equity capital through various means, including a follow-on public offer, rights issue or a qualified institutional placement (QIP).
- Canara Bank also proposes to raise up to Rs.7,000 crore through various means, including rights issue and QIP.
- Out of this, the bank plans to raise about Rs 1,000 crore through an employee stock purchase scheme (ESPS), under which it will issue up to 6 crore equity shares to its staff.
- Bank of Baroda aims to mop up Rs 6,000 crore, while Syndicate Bank plans to access the capital market and raise equity capital of up to Rs 5,000 crore in one or more tranches.
- As per the Rs 2.11 lakh crore capital infusion programme announced by the government in October last year, banks will get Rs 1.35 lakh crore through re-capitalisation bonds, and the balance Rs 58,000 crore through raising of capital from the market.
Source
The Hindu.