Union Bank of India first PSU bank to announce capital infusion by government

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Union Bank of India, PSU bank, capital infusion, Icra Ltd, Oriental Bank of Commerce, Bank of Maharashtra


The announcement late Thursday sent the bank’s shares up as much as 14 percent on Friday, set for the biggest gain since October 2017.

United Bank of India became the first of the country’s ailing state-run banks to announce a new cash injection from the government, disclosing in a filing that it will receive 21.6 billion rupees ($308 million) to improve its capital ratios. The announcement late Thursday sent the bank’s shares up as much as 14 percent on Friday, set for the biggest gain since October 2017. The move is part of the government’s plans to infuse a total 830 billion rupees into state-run banks by March, after injecting 1.06 trillion rupees so far this financial year. The measures are intended to help loss-making institutions meet regulatory capital thresholds, and may help them exit the so-called Prompt Corrective Action framework, which restricts new lending.

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United Bank of India’s infusion nearly matches the 21.77 billion rupees it would need to satisfy capital requirements, according to a report by Icra Ltd., a ratings agency.
Five other state-run lenders — Bank of India, UCO Bank, Central Bank of India, Bank of Maharashtra, and Oriental Bank of Commerce — will also receive fresh infusions, according to a report by BloombergQuint that cites bank officials.

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