InvestorQ : When is government planning to recapitalize Central Bank, IOB, BOI and UCO Bank?
Deepa Salunkhe made post

When is government planning to recapitalize Central Bank, IOB, BOI and UCO Bank?

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Arya Nanda answered.
2 months ago
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Indian government will infuse Rs.14,500 crore into the capital of 4 banks viz. Central Bank of India, IOB, Bank of India and UCO Bank. This will be through non-interest bearing bonds to the banks. This completes the government’s overall capital infusion of Rs.20,000 crore into PSU banks for FY21, if you add up the Rs.5,500 crore infused into Punjab and Sind Bank.

These bonds will be non-interest bearing and no interest shall be payable on issue of the securities, a break from the regular practice of issuing interest paying bonds. In 2018, banks earned interest on recap bonds and could hence show higher income. However, that will not possible this time around. Punjab & Sind Bank had been recapitalized through zero-coupon bonds but that idea was dropped after the RBI objected to it.

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