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Thursday, April 7, 2016

Capital infusion to hit Sebi wall

Market regulator Securities and Exchange Board of India’s (Sebi) requirement that the government reduce its stake in public sector banks to below 75 per cent by August 2017 is a constrain on further capital infusion for several weak public sector banks (PSBs) such as Central Bank of India, IDBI Bank and Indian Bank.

In seven public sector banks government holds more than 75 per cent as on December 31, 2015. They are Bank of Maharasthra (81.61 per cent), Central Bank of India (81.46 per cent), IDBI Bank (80.16 per cent), Indian Bank (82.10 per cent), Indian Overseas Bank (81.19 per cent), Punjab and Sind Bank (79.62 per cent), United Bank of India(82 per cent). Three other public sector banks have government stake between 70 and 75 per cent. They are Bank of India(70.13 per cent), UCO Bank(72.83 per cent) and Vijaya Bank(74.06 per cent). In short, these lenders may not be able to avail of full government capital infusion as this will increase government holding in them to above 75 per cent.

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