State—owned Life Insurance Corporation (LIC) may be roped in to participate in the ₹2.11 lakh crore recapitalisation initiative for public sector banks (PSBs).
Increasing stake
As part of the programme, LIC could also increase its stake in various PSBs which are required to raise ₹58,000 crore from the capital market, sources said.
Besides, they said, LIC could participate in a non operating holding company (NOHC) structure to which the government may transfer its share in various PSBs.
NOHC could then issue recapitalisation bonds worth ₹1.35 lakh crore.
However, government has said the nature of bonds and who will issue them would be decided in the due course.
Finance Minister Arun Jaitley last week said that there were multiple options before the government for recap bonds and they were being examined and the best ones would be explored.
LIC, in the past, has pumped in capital in PSBs through preference share allotment and Qualified Institutional Placement (QIP).
Earlier this year, Bank of India issued preference shares to LIC worth ₹451 crore. Similarly, UCO Bank, IDBI Bank, United Bank of India, Dena Bank and Indian Overseas Bank also issued preference shares to LIC in the past few years as part of their effort to shore up their capital.
Published - October 29, 2017 09:48 pm IST