Public sector lender, Dena Bank, on Thursday said that it has sought a support of Rs 500 crore from the government to bolster its capital base.
"The government holding in the bank would go up after this exercise," Dena Bank Chairman and Managing Director D L Rawal said.
At present, the government holding is estimated at a little over 51 per cent leaving little scope for the bank to expand its equity base through a fresh issue of shares. According to legal requirements, the government holding in a public sector banks has to be at least 51 per cent.
The government has identified at least half-a-dozen public sector banks which need capital infusion to ensure that their capital adequacy ratio stays above 12 per cent. The plan is to provide Rs 20,000 crore to these banks by the end of March 2010. At the end of December, Dena Bank’s CAR was estimated at 11.79 per cent.
A bank executive added that discussions have already started and various options, including a rights issue, are under consideration. The bank’s fund requirement has been assessed keeping in mind its business growth plans over the next two years.
The bank has a headroom to raise Rs 800-crore capital in the current financial year by issuing bonds and raised Rs 200-crore tier-II capital recently.