The government will infuse Rs 1,740 crore in Oriental Bank of Commerce (OBC) as recapitalisation package to shore up the bank's equity capital.
The bank at its board meeting held on March 5 has approved raising capital by offering or issuing up to 4.12 crore shares of Rs 10 each for cash at a issue price of Rs 422.11 per share aggregating up to Rs 1,740 crore to government, OBC informed the Bombay Stock Exchange.
The capital infusion would raise the government's holding in the bank. Currently, the government holds 51.09% in OBC.
The bank has called Extraordinary General Meeting on March 29 for approval of the preferential allotment of equity shares to the government, it said.
The infusion in the bank has to take place before March 31, this year.
Finance Minister Pranab Mukherjee had announced capital infusion of Rs 20,157 crore into public sector banks during the current fiscal to ensure that these entities were able to attain a minimum 8% Tier-I capital by March 31, 2011.
Out of it, the government announced infusion of Rs 6,211 crore into five banks--Union Bank of India, Bank of Maharashtra, IDBI Bank, UCO Bank and Central Bank of India--in the first tranche last year.
The capital infusion is to enhance the lending capacity of the state-owned banks to meet the credit needs of the economy in order to maintain and accelerate the economic growth momentum.
Finance Minister Pranab Mukherjee in 2011-12 Budget presented last week had said, "I propose to provide a sum of Rs 6,000 crore for the year 2011-12 to enable Public Sector Banks to maintain a minimum Tier-I Capital to Risk Weighted Asset Ratio (CRAR) at 8%."
