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Govt chips in Rs 4,557 cr in IDBI Bank to boost CAR

Govt chips in Rs 4,557 cr in IDBI Bank to boost CAR

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  4 Sep 2019 7:56 AM GMT

New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, on Tuesday approved a capital infusion of Rs 4,557 crore by the government in the IDBI Bank.

The government’s contribution was limited to its shareholding because LIC, which already holds 51 per cent stake in the bank, cannot breach the limit as per the norms of insurance regulator, requiring the government to chip in its share of capital infusion.

“The capital for this has to come from its shareholders. LIC is at 51 per cent and is not allowed to go higher by the insurance regulator. Of the Rs 9,300 crore needed, LIC would meet 51 per cent (Rs 4,743 crore). Remaining 49 per cent, amounting to Rs 4,557 crore, is proposed from the government as its share on one time basis,” Union Environment, Forests and Climate Change Minister Prakash Javadekar said at the media briefing on cabinet decisions.

“It will help in completing the process of IDBI Bank’s turnaround and enable it to return to profitability and normal lending, and giving the government the option of recovering its investment at an opportune time,” he said.

Javadekar also said the capital infusion is for meeting the capital adequacy ratio of IDBI Bank.

While announcing the bank merger plan recently, the government said Rs 55,250 crore capital would be infused into the merging banks and also the Bank of Baroda. But the IDBI Bank did not figure in the list.

Out of the Rs 55,250 crore up front capital for credit growth and regulatory compliance to support economy, the PNB will get Rs 16,000 crore, the Union Bank Rs 11,700 crore, the Canara Bank Rs 6,500 crore, the Indian Overseas Bank Rs 3,800 crore, the Central Bank of India Rs 3,300 crore, the Bank of Baroda Rs 7,000 crore, the Indian Bank Rs 2,500 crore and the Uco Bank Rs 2,100 crore. (IANS)

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