Cabinet nod for conversion of pref shares into equity in 3 banks

The Union Cabinet has given its nod for conversion of perpetual non-cumulative preference shares held by the Government in three public sector banks — Indian Bank, UCO Bank and Vijaya Bank — into equity shares. PNCPS amounting to Rs 400 Cr, Rs 1,823 Cr and Rs 1,200 Cr in Indian Bank, UCO Bank and Vijaya Bank, respectively, will be converted into equity in favour of Central Government, Finance Minister P. Chidambaram told. This move will increase the Centre’s holding in Indian Bank from 80% to 82.22%, in UCO Bank from 69.26% to 77.25% and in Vijaya Bank from 55.02% to 71.85%. The conversion, which will be done this fiscal, is however subject to SEBI as well as shareholder approvals. Chidambaram noted that conversion of PNCPS will bolster the tier-I capital of these three banks and make available more funds for meeting the credit needs of the productive sectors of the economy.