United Bank board clears Rs 300cr fund-raising plan

The United Bank of India on Thursday said  its board has given approval to raise up to Rs 300 crore through a rights issue. In a meeting held on Wedneday, the board approved to create, issue and allot up to such numbers of shares of Rs 10 each at a premium to be decided subsequently on rights basis to the existing shareholders of the bank as on the record date to be fixed subsequently, United Bank of India said in a filing on the BSE.

The state-owned bank proposes to raise at least Rs 250 crore but not exceeding Rs 300 crore, including premium from rights issue, it said. The government of India holds 81.56 percent in the Kolkata-based bank. This means that if it decides to raise funds through a rights issue then the government of India, being the largest shareholder, has to subscribe shares to the extent of its holding in the bank.

Prior board approval has been secured to enable capital infusion by the government in the bank. Shares of the bank closed at Rs 66.85 a piece, up 0.30 per cent on the BSE. Besides, the board of the bank also given approval to raise up to Rs 500 crore by allotting perpetual bonds through private placement.

It also approved issue and allotment of perpetual bonds in the nature of promissory notes of Rs 10 lakh each for cash at par up to a maximum amount of Rs 250 crore with a green shoe option up to a maximum of Rs 250 crore through private placement, the filing added. On Wednesday, financial services secretary DK Mittal said the government will finalise Rs 15,000-crore capital infusion for public sector banks soon to help enhance their capital-base and increase lending capacity.

The rights issue is under consideration for recapitalisation of banks, he had said, adding that if the government opts for rights issue for banks, it will be done for all banks.