Govt nod for Rs 800cr Central Bank capital rejig

The government today permitted Central Bank of India, one of the few fully state-owned lenders, to restructure its capital base for strengthening the balance sheet - a decision that virtually clears the decks for the bank's initial public offering (IPO).

The union cabinet gave approval to the Mumbai-based bank to convert Rs 800 crore worth of equity capital out of its total Rs 1,124.14 crore equity into perpetual non-cumulative preference shares, Finance Minister P Chidambaram told reporters here.

"It (the cabinet decision) is expected to strengthen the balance sheet of the bank besides providing it with flexibility to raise capital at a competitive cost," he added.

The minister said this would also help Central Bank in "meeting capital requirements for future growth and improve its credit rating."

The capital restructuring will help the bank in strengthening its capital adequacy ratio to the levels of internationally accepted Basel II norms.