Mumbai: The board of directors at IDBI Bank on Thursday approved the proposal for preferential issue of capital to the government and Life Insurance Corporation (LIC) totalling up to Rs 4,557 crore and Rs 4,743 crore respectively.
The decision is subject to customary regulatory approvals. On September 3, the government had approved Rs 9,300 crore capital infusion into IDBI Bank to increase the lender`s capital base. The bank needed a one-time infusion of capital to complete the exercise of dealing with its legacy book.
It has already substantially cleaned up, reducing net non-performing assets from a peak of 18.8 percent in June 2018 to 8 percent in June 2019.
After this infusion, IDBI Bank expects to be able to subsequently raise further capital on its own and expects to come out of RBI`s Prompt Corrective Action (PCA) framework sometime next year.
The government has announced capital infusion of Rs 70,000 into public sector banks in a bid to clean up their balance sheets which are littered with huge non-performing assets.