Government Preference shares in Banks to be converted into equity ones

The Union Cabinet today gave its approval for conversion of Perpetual Non-Cumulative Preference Shares (PNCPS) held by Government of India (GOI) in Indian Bank, UCO Bank and Vijaya Bank into equity shares.

The conversion will be amounting to Rs.400 crore, Rs.1,823 crore and Rs.1,200 crore respectively into Equity Shares of these banks in favour of GOI, subject to approval of shareholders and also Securities and Exchange Board of India (SEBI) and other authorities.

Briefing the media, Union Home Minister said that the Conversion of PNCPS subscribed by GOI in Indian Bank, UCO Bank and Vijaya Bank into equity shares in the first instance and subsequently in other Public Sector Banks where GOI has invested in PNCPS, PCPS and IDPIs, would enhance the Tier-1 capital of the PSBs.

This would lead to availability of more funds at their disposal to meet the credit requirement of the productive sectors of economy. It will also provide impetus to the economy by including the under-banked rural and semi-urban areas.

The conversion is proposed to be done in the Financial Year 2013-14 subject to approval of shareholders and also the Securities and Exchange Board of India (SEBI) and other authorities.