Bank of India hits 7-month high on government fund infusion plan

The stock was up 2% at Rs 105, its highest level since May 29, after the state-owned bank Saturday said the government has decided to infuse Rs 100.86 billion in the bank as part of capital infusion.

Shares of Bank of India (BOI) hit a seven-month high of Rs 105, up 2% on the BSE in early morning trade, after state-owned bank Saturday said the government has decided to infuse Rs 100.86 billion in the bank as part of capital infusion. The stock was trading at its highest level since May 29, 2018.

“The government of India vide letter dated 26.12.2018 has conveyed its decision to invest Rs 100.86 billion in the equity of the Bank by way of preferential allotment,” BOI said in a regulatory filing.

A board of directors of the Bank would be considering by way of circular resolution on or after 2, January 2019 the proposal for raising capital by this infusion and further issue of equity shares / securities at an appropriate time and other incidental matters thereat, it added.

The recapitalisation would enhance the lending capacity of public sector banks and help them come out of the Reserve Bank of India's Prompt Corrective Action (PCA) framework.

In the past three weeks, BOI has rallied 35% as compared to 3.5% rise in the S&P BSE Sensex.

At 09:55 am, the stock was trading 1.3% higher at Rs 104 against 0.22% gain in the benchmark index. A combined 3.9 million equity shares changed hands on the counter on the BSE and NSE so far.