UBI, Allahabad Bank get shareholder nod for infusion

Public sector lenders, United Bank of India and Allahabad Bank, on Wednesday obtained the shareholders’ approval for capital infusion. The infusion, likely before the end of this financial year, will raise the government’s stake in the two banks.

In case of Allahabad Bank, an infusion of Rs 670 crore will raise the government’s stake from the existing 55.2 per cent to 58 per cent. On an infusion of Rs 308 crore, the same will increase to 85.5 per cent for UBI, as against the existing 84.2 per cent.

The infusion will help both the banks shore up their business and increase capital base.

Allahabad Bank got the approval for issuance and allotment of 29 million equity shares of Rs 10 each, and at a premium of Rs 217 a share, to the government on the basis of preferential allotment.

Chairman and Managing Director J P Dua said the bank’s business had increased by 30 per cent in December as compared to the year before.

To meet increasing business requirements and shore-up long term resources and capital base, the government had initially approved an infusion of Rs 292 crore to attain the minimum Tier-I capital adequacy ratio of eight per cent as on March 31, 2011. Subsequently, it increased it to Rs 670 crore.

UBI got the approval for the allotment of 28 million equity shares to the government on the back of the latter’s decision to infuse Rs 308 crore in its Tier-I capital through private placement of shares.

The bank is expected to allot the shares immediately on receipt of funds from the government, expected before the close of this financial year.