UCO bank shares surged on Tuesday after the public sector lender received an equity infusion of Rs 3,074 crore from the government.
The capital infusion was part of the government's Rs 10,882 crore package for four public sector banks, such as UCO Bank, and Syndicate Bank, Bank of Maharashtra and Central Bank of India.
UCO bank announced the centre's equity infusion, by way of preferential allotment, in a filing to the Bombay Stock Exchange.
"In term of Regulation 30 of the SEBI (LODR) Regulation 2015, the exchanges are hereby informed that Govt of India vide letter No. F.No.7/38/2014-BOA dated 26.12.2018 has conveyed its decision to invest Rs. 3,074 Crores in the equity of the Bank by way of preferential allotment and Bank hos received the amount on 31.12.2018 (i.e. Today)," the bank said in a statement on Monday.
While Bank of Maharashtra received Rs 4,498 crore, Syndicate Bank got 1,632 crore and Central Bank of India Rs 1,678 crore. The government's equity infusion is intended to help PSBs steer clear of RBI's punitive restrictions, and thereby ease liquidity in the credit markets.
The government has announced a Rs 65,000 crore package for recapitalising public sector banks in the country during 2018-19. As much as Rs 23,000 crore has been disbursed so far.
The government's equity infusion in the public sector banks is part of the measures to help more PSBs emerge from the Reserve Bank of India's Prompt Corrective Action (PCA) framework. The PCA framework, which lays down stricter norms for banks, has been a bone of contention between the government and the RBI.
The government has been looking at getting the RBI to remove some banks from the PCA programme. Eleven state-run banks have been pooled into this list by the RBI, a move that has curbed these banks' lending capacity.
The shares rose more than 15 percent to 23.40 intraday on Tuesday.
The Kolkata-based bank was in doldrums in the early part of 2018. In April, its shares nosedived after the Central Bureau of Investigation (CBI) charged former chairman Arun Kaul for alleged cheating.