The government on Tuesday approved over Rs 9,000 crore capital infusion in IDBI Bank with a view to increasing the lender's capital base.
The Union Cabinet has cleared recapitalisation of IDBI Bank with one-time infusion of funds by both the government and the LIC, Information and Broadcasting Minister Prakash Javadekar told reporters here. LIC holds 51 per cent stake in the private sector lender.
The bank had reported a narrower net loss of Rs 4,918 crore in the January-March quarter of the last financial year, versus a loss of Rs 5,663 crore loss in the same period a year ago, buoyed by a lower provisions for bad loans. The Reserve Bank of India had invoked prompt corrective action (PCA) framework against IDBI Bank in May 2017 in the backdrop of a sharp rise in bad loans.
Out of Rs 9,000 crore, the government will provide Rs 4,557 crore as one-time re-capitalisation to IDBI Bank, he said. Besides, he said, LIC will infuse Rs 4,700 crore.
The move comes amid government's mission to revive the country's public sector lenders in times of worsening economic stress. Last week, Finance Minister Nirmala Sitharaman announced the merger of 10 public sector banks to four banking entities.
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While Punjab National Bank, Oriental Bank of Commerce and United Bank will be merge to form India's second largest bank, Canara Bank will be merged with Syndicate Bank to create the fourth largest public sector bank with Rs 15.20 lakh crore worth business.
Sitharaman also announced that Union Bank, Andhra Bank and Corporation Bank will be merged to become India's fifth largest public sector bank with Rs 14.59 lakh crore business. Indian Bank and Allahabad Bank will merge to create the seventh largest public sector bank with Rs 8.08 lakh crore business.
