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3 banks approach LIC for funds

Three public sector banks – Central Bank of India, United Bank of India and Bank of Maharashtra – are planning to make a preferential allotment to LIC to raise funds needed for their growth and to meet regulatory requirements. Finance minister Arun Jaitley had said during budget presentation that banks need to go to the equity market to raise money. LIC’s infusion of money into the three banks will mean that the government will continue to indirectly hold a major shareholding. Some other banks, in which LIC has already hit its regulatory limit of 15%, are planning to raise money through the Qualified Institutional Placement (QIP) route. Under this arrangement, shares of a company are allotted to select institutional investors. Three of those banks are Union Bank of India, Canara Bank and Corporation Bank. LIC has the highest stake in Corporation Bank, where it holds 22%. Central Bank of India is expected to raise Rs 580 crore, United Bank of India Rs 300 crore and Bank of Maharashtra Rs 400 crore through the proposed preferential allotment to LIC.

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