Life Insurance Corporation will infuse a whopping Rs 143 crore into Corporation Bank by way of preferential equity.
The infusion will be by way of issue of equity shares on preferential basis to the LIC, the bank said on 14 September.
“The company (bank) have received a letter dated 11 September, 2015 from LIC expressing their intention to infuse capital to the extent of Rs 143 crore into the bank’s capital funds,” it said.
The bank proposed to raise funds by way of preferential issue of up to 2,81,60,693 equity shares at a price of Rs 50.78 per share. This is including premium, it said.
About the proposed preferential issue to LIC, it said the bank is growing at a growth rate of 20% over the last many years and it needs funds to expand business.
“To meet the requirement of funds to expand business by way of resources and for general lending purposes as may be the case as to comply with BASEL-III requirements relating to capital adequacy,” it said.
The bank said, however, the capital to be raised through this preferential allotment of equity will not be used for making investment, in whatever form, in any of its subsidiaries or joint ventures.
Corporation Bank said it’s board has approved to place LIC’s intent of capital infusion in the extraordinary general meeting scheduled to be held on September 28.
“There will not be any change in the bank’s management as a result of the proposed preferential allotments,” it said in the filing.
Earlier, in August, the Centre had decided to infuse a capital of Rs 857 crore into the bank.
Among others 12 other banks, including SBI, PNB, Bank of Baroda, Canara Bank will also get capital infusion from government.
Corporation Bank scrips closed 2.41% higher at Rs 46.80 apiece on BSE Sensex.