Shares of three public sector banks advanced 2.38% to 8.17% after the government approved infusion of fresh capital in these banks.
Allahabad Bank (up 8.17%), Indian Overseas Bank (IOB) (up 6.48%) and UCO Bank (up 2.38%) advanced.The government has approved releasing fresh funds to three public sector lenders - Allahabad Bank, Indian Overseas Bank (IOB) and UCO Bank - for preferential allotment of shares.
The Ministry of Finance has approved infusing fresh capital amounting to Rs 2,153 crore in Allahabad Bank, Rs 2,142 crore in UCO Bank and Rs 4,630 crore in IOB via for preferential allotment of shares.
The said fresh capital infusion in these banks by the government is a part of the announcement made by Finance Minister Nirmala Sitharaman, in her maiden Budget on 5 July 2019.
All three banks are currently under the Reserve Bank of India's prompt corrective action (PCA) framework and their ability to exit the same will be driven by a reduction in net non-performing asset ratio to less than 6.0% and maintenance of capital conservation buffer, which further depends on the capital infusion by the government.
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