Govt to inject Rs 250 cr into United Bank

The government is proposing to inject Rs 250 crore into the Kolkata-based United Bank of India (UBI) and simultaneously restructure capital to help the state-owned lender raise funds from equity market.

The proposal to recapitalise the bank, which will shore up capital adequacy ratio to over 12 per cent, is likely to come up before the Cabinet next week, official sources said.

As part of capital restructuring exercise, the government will reduce its paid-up capital of the bank, which will raise earning per share of UBI.

UBI has share capital of Rs 1,532.43 crore, which according to sources is high and needs to be reduced to make it lucrative for potential investors.

Earlier, in December 2008, the bank had submitted a capital restructuring plan that proposed reduction in its paid-up equity capital to Rs 266 crore from the existing base.

As per the proposal, the bank suggested transfer of Rs 1,156 crore of the share capital to general reserves and conversion of Rs 110 crore to perpetual debt.

Last year, the government restructured capital of Punjab and Sind Bank, reducing its paid-up capital from Rs 743 crore to Rs 560 crore.