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Rs 3,800-crore dose for three banks
Tribune News Service

New Delhi, February 11
In an effort to improve the capital adequacy of the public sector banks UCO Bank, Central Bank of India and the Vijaya Bank the government today decided to infuse Rs 3,800 crore into the three banks.

The Union Cabinet took this decision at its meeting here today whereby under the recapitalisation package, Central Bank of India will get Rs 1,400 crore while UCO Bank and Vijaya Bank will get Rs 1,200 crore each.

In another decision, the Cabinet also approved the enhancement in the authorised share capital of National Safai Karamcharis Finance & Development Corporation (NSKFDC).

Briefing reporters after the meeting, Home Minister P Chidambaram said the capital infusion would be done in two tranches. The first tranche would be made available during the current fiscal and the remaining in 2009-10.

As part of the first tranche, UCO Bank will get Rs 450 crore, while Central Bank of India and Vijaya Bank will get Rs 700 and Rs 500 crore, respectively, in the current fiscal. In the second tranche reserved for 2009-10, UCO Bank will get Rs 750 crore, while Central Bank of India and Vijaya Bank will get Rs 700 crore each.

The Home Minister said the capital infusion will help banks raise capital adequacy over 12 per cent, much above the Basel II norms of 9 per cent.

He said the infusion would increase the government holding in the three state-run banks. The increase in the government's holding in these banks would depend on the instruments that they subscribe to and such decisions would be taken by respective boards, Chidambaram said.

The government holding in Central Bank of India currently stands at 80.20 per cent, UCO Bank 75.98 per cent, while in Vijaya Bank it is 53.87 per cent.

The government has allowed the enhancement of the authorised share capital of NSKFDC from the existing Rs 200 crore to Rs 300 crore to enable higher coverage of safai karamcharis under its schemes.

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