The government today is understood to have approved a share split in Oil and National Gas Corporation and issue of bonus shares as a prelude to the company’s follow-on public offer in March 2011. Sources said the Cabinet Committee on Economic Affairs (CCEA) approved splitting a share of ONGC with a face value of Rs 10 into two shares of Rs 5 each.
Besides, it is believed to have approved a 1:1 bonus issue (a share for every share held). However, no official comments could be obtained. State-owned Oil and Natural Gas Corporation had suggested to the government that the company’s stock be split ahead of the FPO — through which the government plans to sell 5 per cent of its shares and expects to mop up Rs 10,800 crore.
After the offer, the government shareholding in ONGC would come down to 69.14 per cent from the current 74.14 per cent.
Shares of ONGC closed up by Rs 40.30, or 3.23 per cent, at Rs 1,288.50 each on Bombay Sensex Exchange today. ONGC had appointed two international auditors —
DeGolyer and MacNaughton and Gaffney, Cline and Associates — to certify its reserves.
ONGC, which usually gets its reserves audited every five years, is getting a certification in the third year because of the planned FPO.
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Rs 6,000-crore capital for PSBs
The Union Cabinet today approved fresh capital infusion of Rs 6,000 crore into all public sector banks (PSBs) to increase their capital base. This would be in addition to the Rs 15,000 crore already announced in the Budget. This would raise the government’s stake in PSBs to 58 per cent.
“The proposed capital infusion would enhance the lending capacity of the PSBs to meet the credit requirement of the economy in order to maintain and accelerate the economic growth momentum,” said an official statement released after the Cabinet meeting.
The statement also stated that the additional availability of capital would benefit the labour-intensive sectors such as agriculture, small and medium enterprises, export and small units, among others.
“During the recent global financial crisis, the PSBs played a pivotal role by extending credit to all the productive sectors of the economy. The government has always given ambitious targets to the PSBs ranging from credit disbursement, deposit mobilisation, enhanced business and profitability indicators to financial inclusion,” the statement added.
During 2008-09, the advances of PSBs increased by over 25 per cent compared to 10 per cent by private sector banks and around 4 per cent by foreign banks.
“The present capitalisation process of the PSBs has presented an opportunity to the government to raise its shareholding in the PSBs, specially in those PSBs where the government’s holding is close to 51 per cent. This will enable the PSBs to raise additional capital from the market, in future, without depending upon the government,” it said.
This move would now enable the banks to raise additional capital from the market without relying on the government.