In a reversal of its earlier stand, the finance ministry has decided to provide a Rs 1,800-crore bailout package for Indian Bank and Uco Bank. The third weak bank, United Bank of India (UBI), has told the government that it does not need any recapitalisation.
Sources told Business Standard that while Rs 1,600 crore would go to Indian Bank, Uco Bank would get the balance Rs 200 crore.
Indian Bank is expected to get the amount in two equal tranches, with the second part to be given in the next fiscal. The proposal awaits clearance from minister of state for finance Balasaheb Vikhe Patil and has been accepted by department of economic affairs secretary CM Vasudev, ministry sources said.
A senior finance ministry official said the recapitalisation assistance to Uco Bank would compensate the bank for its Rs 202 crore expenditure on the golden handshake offered to 3,936 employees.
He added that Uco Bank has decided to go in for a public issue next year by which time it would meet the requirement of a net profit for three years.
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