Allahabad Bank to get government investment of Rs 3,054 cr

By: | Updated: November 9, 2018 6:33 AM

State-run Allahabad Bank on Thursday said the Centre is infusing Rs 3,054 crore into it as an investment during the current fiscal.

rbi, allahabad bankThe central bank had asked the lender to restrict expansion of risk-weighted assets (RWA), reduce exposure to high-risk loans and restrict accessing or renewing wholesale deposits.

State-run Allahabad Bank on Thursday said the Centre is infusing Rs 3,054 crore into it as an investment during the current fiscal.

In a stock exchange filing, the lender said, “…the bank has received a communication from the government of India, ministry of finance, department of financial services, regarding a fresh capital infusion of Rs 3,054 crore towards contribution of the central government in the preferential allotment of equity shares (special securities/bonds) of the bank during the financiai year 2018-19, as government’s investment.”

The bank’s capital adequacy ratio as per Basel-III stood at 6.88% as on June 30, 2018. The government owned a 71.81% stake in Allahabad Bank at the end of first quarter of FY19.

Notably, the Reserve Bank of India (RBI) had imposed additional restrictions on the Kolkata-headquartered bank under the Prompt Corrective Action (PCA) framework in May this year.

The central bank had asked the lender to restrict expansion of risk-weighted assets (RWA), reduce exposure to high-risk loans and restrict accessing or renewing wholesale deposits.

The public sector bank reported a net loss of Rs 1,944.37 crore for the first quarter this fiscal against a net profit of Rs 28.84 crore during the same period last fiscal as the lender saw a 29% fall in its operating profit and a 53.6% rise in provisions to cover sticky loans.

The bank, however, pruned the losses substantially on a quarter-on-quarter basis. Its net loss for the fourth quarter last fiscal had stood at Rs 3,509.63 crore. Gross non-performing assets (NPAs) in absolute term came down to Rs 25,067.55 crore as on June 2018 from Rs 26,562.79 crore as on March 2018.

However, on a year-on-year basis, it was up by over 19% from Rs 21,032.42 crore as on June 2017. Gross NPAs as a percentage of total loans stood at 15.97% in the June quarter against 15.96% in the previous quarter, while Net NPAs were at 7.32% against 8.04%.

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