Union Bank gets Rs 111-cr govt funding

NEW DELHI: The government will infuse Rs 111 crore into Union Bank of India as part of its planned capital support to the state-run banks to shore up their lending capacity.

The government will pump in the money by buying perpetual non-cumulative preference shares from the bank.

"The company has received a letter from the government containing the sanction for the payment of Rs 111 crore to the bank towards contribution of the Centre in the perpetual non-cumulative preference shares (PNCPS) of the bank," Union Bank said in a filing to the Bombay Stock Exchange today.

Finance Minister Pranab Mukherjee in the budget speech had announced that the government planned a capital support of Rs 15,000 crore to public sector banks in the current fiscal to ensure that they are able to attain a minimum 8 per cent tier-I capital by March 31, 2011.

Following which the Cabinet approved capital infusion plan, which will help public sector banks to increase their lending capacity by Rs 1.85 lakh crore.

Three other banks namely, IDBI, Bank of Maharashtra and UCO Bank would also get capital by way of PNCPS.

Shares of Union Bank closed at Rs 312, up 0.13 per cent on the BSE.