Page 5 - Banking Finance March 2019
P. 5
BANK UPDATE
BANKING
Vijaya, Dena BoB merger Govt to infuse Rs 48,239 cr in 12 PSBs
effective April 1 The Finance Ministry announced to invest Rs 48,239 crore in 12 public sector
banks (PSBs) in this fiscal to help them maintain
Bank of Baroda said the merger of regulatory capital requirements and finance
Dena Bank growth plans.
and Vijaya
Bank with With this funding, the total amount of capital
itself would infusion would increase to Rs 1,00,958 crore of
be effective the planned recapitalisation of Rs 1.06 lakh
from April 1 as per the scheme of crore for PSBs for the current fiscal, according
amalgamation approved by the gov- to Financial Services Secretary Rajiv Kumar.
ernment.
The remaining Rs 5,000 crore capital infusion would be used as buffer for any
Besides, the board of the bank fixed contingency or growth capital for Bank of Baroda which is in the process of
March 11, 2019, as record date for merging Dena Bank and Vijaya Bank with itself. "It (pending Rs 5000 crore) may
issuing and allotting equity shares of be used for any contingency or for growth capital wherever it is necessary in-
the Bank of Baroda to the Share- cluding amalgamated entity of Bank of Baroda," Kumar said.
holders of Vijaya Bank and Dena
Bank. This scheme may be called the Corporation Bank is the biggest beneficiary of this round of capital infusion with
Amalgamation of Vijaya Bank and Rs 9,086 crore of funding, followed by Allahabad Bank with Rs 6,896
Dena Bank with Bank of Baroda crore.Explaining the rationale for giving higher capital to these two banks,
Scheme, 2019, BoB said citing the Kumar said equipping these two better performing banks, currently under the
government notification. Prompt Corrective Action (PCA) supervision of the RBI, would help meet requi-
As per the Scheme of Amalgamation, site capital thresholds of 7.375 CET-1 ratio, 8.875 per cent Tier I ratio, 10.875
shareholders of Vijaya Bank will get per cent of capital-to-risk weighted assets ratio (CRAR) and the net NPA ratio
402 equity shares of BoB for every threshold of below 6 per cent.
1,000 shares held. In case of Dena Further, Rs 4,638 crore and Rs 205 crore will be provided to Bank of India and
Bank, its shareholders will get 110 Bank of Maharashtra. These banks have recently come out of the regulatory
shares for every 1,000 shares of BoB.
supervisory framework PCA of the RBI.
The government in September last
year had announced merger of state- Kumar further said Punjab National Bank will get Rs 5,908 crore, Union Bank of
owned Vijaya Bank and Dena Bank, India Rs 4,112 crore, Andhra Bank Rs 3,256 crore and Syndicate Bank Rs 1,603
with larger peer Bank of Baroda, aim- crore.
ing to create the third largest lender The government will pump in Rs 12,535 crore in four other banks under PCA --
after SBI and ICICI Bank. Central Bank of India, United Bank, UCO Bank and Indian Overseas Bank.
BANKING FINANCE | MARCH | 2019 | 5
