The Centre on Tuesday agreed to infuse IDBI Bank with more than Rs 9,000 crore in order to increase its capital base, PTI reported. The bank’s shares jumped 10.84% after the announcement and were up 5.78% by the end of the day.
This announcement by the government came days after Union Finance Minister Nirmala Sitharaman said 10 public sector banks would be merged into four entities, and they would be given Rs 70,000 crore so that their robust balance sheets can be used to boost credit and push growth.
IDBI Bank will be given the money by the government and Life Insurance Corporation, which has 51% stake in the lender, The Indian Express reported. The government will give the bank Rs 4,557 crore as one-time recapitalisation fund, while LIC will provide Rs 4,700 crore.
The bank had reported a net loss of Rs 3,800 crore in the first quarter of the 2019-’20 financial year, and was put on credit watch last month by ratings agency S&P Global. “It will help both IDBI and LIC and shows the government’s commitment to take banking to a sound level,” Union Minister Prakash Javadekar said while making the announcement.
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