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Government of India to convert Perpetual Non-Cumulative Preference Shares (PNCPS), which it is holding in Indian Bank to equity shares, aggregating upto Rs 400 crore. This would enable the Bank to meet the Basel III requirements.
In an explanatory statement the Bank said the Paid-up Capital of the Bank includes Perpetual Non-Cumulative Preference Shares (PNCPS) of Rs 400 crore, consisting 4,00,00,000 Perpetual Non-Cumulative Preference Shares of Rs 100 each with a coupon benchmarked to Repo Rate on the relevant date. The entire PNCPS is held by the Government of India.
It was further said that the PNCPS will not be reckoned for 100% weightage under Tier I Capital as per Basel III norms. The Bank had requested Government of India to consider the proposal for conversion of PNCPS entirely held by them into equity to enable the Bank to meet the Basel III requirements.
The conversion of PNCPS into equity will also create headroom for raising Basel III compliant bonds under Tier I / Tier II Capital and also issuing of equity through Qualified Institutional Placement / Follow-on Public Offers.
Indian Bank said that the Government, on January 06, 2014, conveyed approval for conversion of PNCPS into equity shares subject to approval of shareholders, SEBI and other authorities.
The conversion of PNCPS into equity will not result in any outflow to the Government of India.
