Shares of Allahabad Bank bounced 10.98 per cent to Rs 19.70 per share on the BSE on Friday after the state-owned bank said the President has sanctioned fresh capital infusion of Rs 2,153 crore, to be released during the current financial year of 2019-20.
"The President has sanctioned the release of fresh capital infusion fund of Rs 2,153 crore towards contribution of the Central Government in the preferential allotment of equity shares of the bank during the financial year 2019-20, as Government's investment," the bank said in an exchange filing, post-market hours, on Thursday. READ FILING HERE
At 9:34 am, the stock was trading 8.45 per cent higher at Rs 19.25, as against a 0.28 per cent rise in the benchmark S&P BSE Sensex. Nearly 4.6 million shares changed hands till the time of writing of this report.
Infusion of the capital into the bank by the government comes ahead of the merger with Indian Bank, which is expected to help the bank meet the regulatory requirement to get amalgamated with a bigger peer.
In November, Allahabad Bank had informed the exchanges that the government has given in-principle approval to its amalgamation into Indian Bank, where the latter is the acquiror while Allahabad Bank is the transferor.
In August, the government had announced capital infusion into public sector banks to boost lending and improve liquidity situation. While announcing the decision, finance minister Nirmala Sitharaman had said that the move could generate an additional lending and liquidity in the financial system to the tune of Rs 5 lakh crore. Notably, Allahabad Bank had not featured in the list of banks who were approved a total fresh capital infusion of Rs 55,250 crore, as announced on August 30 by the government.