New Delhi: Ahead of its merged entity operation, Bank of Baroda will receive Rs 5,042 crore fund infusion from the government.
The Ministry of Finance has conveyed its decision to infuse the capital in Bank of Baroda. The infusion will be by way of preferential allotment of equity shares (special securities/bonds) of the bank during FY 2018-19 as government’s investment, the bank said on Thursday.
Officials said this will help the bank meet credit and contingency needs.
The merged entity also involving Vijaya Bank and Dena Bank will start operation from April 1.
Meanwhile, the Supreme Court refused to stay the amalgamation of Vijaya Bank, Dena Bank and Bank of Baroda, rejecting a plea from the Bank Officers Association.
The stock hit an intraday high of Rs 123.45 and intraday low of Rs 120.4. The net turnover during the day was Rs 11.64 crore.
In February, the government approved Rs 48,239 crore recap bonds in 12 public sector banks. The merger will create India’s third-largest bank with a total business of over Rs 14.82 lakh crore.
When the three banks are merged, the combined entity’s capital adequacy ratio will be at 12.25 per cent, with tier-1 capital at 9.32 per cent and net non-performing assets at 5.71 per cent. The merged entity will have nearly 9,500 branches.
Informed sources said the capital may be infused as Dena Bank is a weak prompt corrective action bank and it should not drag down the overall balance sheet of Vijaya Bank and Bank of Baroda on regulatory capital breach when they start operations and also for lending.
The MD and CEO of Bank of Baroda, P.S. Jaykumar, may head the merged entity, the sources said.