Bank of Baroda to get Rs5,042 cr capital infusion
Ahead of its merged entity operation, Bank of Baroda will receive Rs5,042 crore fund infusion from the government.
 
The Ministry of Finance has conveyed its decision to infuse the capital in Bank of Baroda. The infusion will be by way of preferential allotment of equity shares (special securities/bonds) of the bank during FY 2018-19 as government's investment, the bank said on Thursday.
 
Officials said this will help the bank meet credit and contingency needs.
 
The merged entity also involving Vijaya Bank and Dena Bank will start operation from April 1.
 
Meanwhile, the Supreme Court refused to stay the amalgamation of Vijaya Bank, Dena Bank and Bank of Baroda, rejecting a plea from the Bank Officers Association.
 
In February, the government approved Rs48,239 crore recap bonds in 12 public sector banks. The merger will create India's third largest bank with a total business of over Rs14.82 lakh crore. 
 
When the three banks are merged, the combined entity's capital adequacy ratio will be at 12.25%, with tier-1 capital at 9.32% and net non-performing assets at 5.71%. The merged entity will have nearly 9,500 branches.
 
Informed sources said the capital may be infused as Dena Bank is a weak prompt corrective action bank and it should not drag down the overall balance sheet of Vijaya Bank and Bank of Baroda on regulatory capital breach when they start operations and also for lending. 
 
The MD and CEO of Bank of Baroda, P.S. Jaykumar, may head the merged entity, the sources said.
 
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