Govt approves Rs 1,000 cr capital support to Bank of India

Saikat Das
Moneycontrol.com

State-owned Bank of India (BoI) has received in-principal approval from its major stake holder - the government of India (GoI) to improve its capital base by Rs 1,000 crore in 2012-13. Speaking to moneycontrol, a source who is aware with the development, said the mode of capital infusion is not yet finalized but in all probability it would be through preferential allotment of shares.

This means the lender will enjoy more leeway to extend credit to individuals and companies. Earlier, BoI had sought Rs 4,000 crore capital to be deployed in the next three years. The government now has asked the bank to submit proposals to identity the route of recapitalization. Due to the prevaling market condition, the bank would like to go through the preferential (shares) way. It is expected to be made official in the fourth quarter (Jan-Mar) of FY12.

After pref allotment, GoI