Govt's move to inject Rs 14,500 cr in 4 PSBs won't raise tangible equity

According to Ind-Ra, these securities would be factored at par value rather than at the discounted value in the banks' balance sheet.

The Centre’s move to inject Rs 14,500 crore in four state-run banks through zero-coupon bonds will bolster their regulatory capital levels, but their lower intrinsic values will not strengthen their tangible equity by as much. Of this, the Central Bank of India is to get Rs 4,800 crore, Indian Overseas Bank Rs 4,100 crore, Bank of India Rs 3,000 crore and UCO Bank Rs 2,600 crore.

According to India Ratings & Research (Ind-Ra), these securities would be factored at par value rather than at the discounted value in the banks’ balance sheet.

These banks have weak tangible buffers, or a