Govt to infuse Rs 48,239 crore in 12 PSU banks

The government has approved recapitalisation of Rs 48,239 crore in 12 public sector banks, including fraud-hit Punjab National Bank.

It will pump Rs 6,896 crore in Allahabad Bank, Rs 4,112 crore in Union Bank of India, Rs 4,638 crore in Bank of India, Rs 205 crore in Bank of Maharashtra and Rs 9,086 crore in Corporation Bank.

The government will also put Rs 3,256 crore in Andhra Bank, Rs 1,603 crore in Syndicate Bank, Rs 5,908 crore in Punjab National Bank and Rs 2,560 crore in Central Bank of India.

The Centre will inject Rs 2,839 crore in United Bank of India and Rs 3,330 crore in UCO Bank.

The recapitalisation funds for 12 public sector banks have been divided in four categories. The first category is for bringing banks above the prompt corrective action (PCA) framework in which Allahabad Bank and Corporation Bank will get Rs 15,982 crore (33 per cent of total recap).

Second is for banks, which recently exited the PCA, in which Bank of India and Bank of Maharashtra will get Rs 4,843 crore (10 per cent of the total).

Rest will be divided in banks keeping them above the PCA limit and banks under the action.

The government will also infuse Rs 3,806 crore in Indian Overseas Bank.

“This is positive as it comes at a time when NBFCs are facing liquidity issue, and the capital will help some banks to be kept out of PCA so that lending can pick up and increase market share of public sector banks specially the recent banks which have exited PCA. We have BUY rating on Allahabad Bank, Bank of India and Oriental Bank of Commerce,”said Sameer Kalra - Equity Research Analyst at Target Investing.

The government in December had infused Rs 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds.