Capital infusion by Government in IDBI Bank

Published on September 04, 2019
Current context: The Union Cabinet headed by Prime Minister Modi has approved the Capital Infusion of Rs 4,557 crore in the IDBI Bank.
Capital infusion by Government in IDBI Bank 
  • The infusion will be done through “recap bonds” i.e. there will no impact on the liquidity, as the bank will buy the recap bond from the government on the same day for the capital infused by the government into the bank.
  • With the infusion, the bank would be able to subsequently raise further capital on its own and has more probability to come out of the RBI’s Prompt Corrective Action (PCA) framework.
  • The IDBI bank has reduced its net NPA from peak of 18.8% in June 2018 to 8% in June 2019.
  • The government continues to be a promoter and holds 46.46% stakes of the IDBI Bank and LIC acquired 51% stakes.
  • Out of the Rs. 9,300 crore needed for a one-time infusion of capital, LIC would meet 51% (Rs. 4,743 crores) and Government will provide Remaining 49%, amounting to Rs. 4,557 crore, on a one-time basis.

Question: 

Q.1 The Government has recently approved the Capital Infusion of Rs 4,557 crore in which bank on a one time basis?
a. Allahabad Bank
b. Bank of Baroda
c. IDBI Bank
d. Dena Bank

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