NEW DELHI: State-owned Allahabad Bank on Thursday said it will get a fresh capital infusion of Rs 2,153 crore from the government in the current financial year.
The Department of Financial Services in a letter on Thursday conveyed the sanction for release of the fresh capital infusion fund of Rs 2,153 crore, Allahabad Bank said in a regulatory filing.
The capital infusion is towards the contribution of the central government in the preferential allotment of equity shares of the bank during the financial year 2019-20 as the government's investment, it said.
Infusion of the capital into the bank by the government comes ahead of the merger with Indian Bank and it will help the bank meet the regulatory requirement to get amalgamated with a bigger peer.
Notably, Allahabad Bank had not featured in the list of banks who have approved a total fresh capital infusion of Rs 55,250 crore, as announced on August 30 by the government.
In this list, Punjab National Bank was approved to get Rs 16,000 crore, Union Bank of India Rs 11,700 crore, Canara Bank Rs 6,500 crore and Indian Bank Rs 2,500 crore.
Besides, Bank of Baroda got a capital infusion of Rs 7,000 crore, Indian Overseas Bank Rs 3,800 crore and Central Bank of India Rs 3,300 crore.
This round of capital infusion as intended will enhance the capital base of public sector banks so that they could accelerate lending in a bid to bolster growth.
Shares of Allahabad Bank climbed over 11 per cent in Friday’s trade after the company said it will receive a fresh capital infusion from the government in the ongoing financial year. The stock climbed 10.98 per cent to hit a high of Rs 19.70 on Bombay Stock Exchange.