Allahabad Bank will receive 670 crore as fresh equity from the government before March, to raise the government holding in the bank to 58% from 55.23%. The bank will preferentially allot 2, 95, 15,418 equity shares of Rs. 10 each at a premium of Rs. 217 per share to the government against the capital injection. Consequently, its tier-I will improve to 8.23% at the end of the fiscal.
The capital dose will provide the banks much larger headroom to raise capital through follow-on public offer. As per the extant guidelines, government holding in public banks can’t go below 51%, the norm which restricts equity-raising capacity for many banks like Allahabad Bank, Dena Bank or Union Bank of India, wherein the government holding has come close to the stipulation. crackcrack
