FinMin nod for Indian Bank, Central Bank IPOs

The Finance Ministry has approved the IPO plans of Indian Bank and Central Bank and is likely to give its nod to the public issue plans of United Bank shortly.

With this, the government will shed its equity by 10-20% in these banks, which are among the last in which it holds 100% stake.

"We have cleared two banks (IPOs), will soon clear the third one," Finance Minister P Chidambaram said here on the sidelines of the launch of e-filing of tax returns.

The Indian Bank and Central Bank IPO plans have been cleared while the IPO plan of Kolkata-based United Bank of India is likely to be approved next week, sources said.

The three banks are likely to raise Rs 500-1,000 crore each in early 2007 to shore up their capital base to meet the Basel II requirements.

Under Basel-II, banks have to provide for operational risk from March 2007, besides providing for credit and market risk.

The government has written off the accumulated losses of these banks against their equity capital as part of financial restructuring before IPOs.

All these banks are likely to convert part of their equity into preferential capital and place them with the government prior to the IPOs.