The government is considering a Rs 900-crore capital infusion plan to Dena Bank for meeting its capital requirement and business growth.
The bank has requested the government to infuse the capital by way of preference shares and equity capital on preference basis, official sources said. Since a lot of issues are involved in it, government is examining the proposal, sources said.
The bank cannot raise money from the capital market as the government holding has hit 51 per cent and according to regulations, government cannot lower its stake in nationalised banks below that.
Sources said the bank has requested the government to provide Rs 500 crore during the current fiscal and the remaining Rs 400 crore in 2010-11. As per the proposal, the bank has requested the government to pump in Rs 300 crore through preference shares and Rs 200 crore as perpetual non-cumulative preference shares in the current fiscal.
Meanwhile, the World Bank has agreed to provide a $2 billion loan for the recapitalisation of public sector units (PSU) banks.
The World Bank board is expected to meet in the second-half of September in Washington to approve a $2-billion loan for the recapitalisation of PSU banks and another $1.2 billion loan for the IIFCL.
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Both the loans form part of the $14 billion loan amount earmarked by the World Bank for India over the next three years.
For the quarter ended June 30, 2009, the net profit of Dena Bank jumped by 68.40 per cent at Rs 115.02 crore, compared to Rs 68.30 crore in the same quarter a year ago. Total income rose to Rs 1,123.82 crore in the latest quarter against Rs 834.40 crore.