The government has approved recapitalisation of Rs 48,239 crore in 12 public sector bank, including fraud-hit Punjab National Bank.

It will pump Rs 6,896 crore in Allahabad Bank, Rs 4,112 crore in Union Bank, Rs 4,638 crore in Bank of India, Rs 205 crore in Bank of Maharashtra and Rs 9,086 crore in Corporation Bank.

The government will also put Rs 3,256 crore in Andhra Bank, Rs 1,603 crore in Syndicate Bank, Rs 5,908 crore in Punjab National Bank and Rs 2,560 crore in Central Bank of India.

The Centre will inject Rs 2,839 crore in United Bank and Rs 3,330 crore in UCO Bank.

The recapitalisation funds for 12 public sector banks have been divided in four categories. The first category is for bringing banks above the prompt corrective action (PCA) framework in which Allahabad Bank and Corporation Bank will get Rs 15,982 crore (33 per cent of total recap).


Second is for banks, which recently exited the PCA, in which Bank of India and Bank of Maharashtra will get Rs 4,843 crore (10 per cent of the total).

Rest will be divided in banks keeping them above the PCA limit and banks under the action.

Earlier in the day, the Nifty PSU Bank index closed 1.72 per cent higher at 2,742.65. Shares of Punjab National Bank and Union Bank of India closed 1.79 per cent and 1.68 per cent higher at Rs 71.20 and Rs 69.65, respectively.

Central Bank rallied 3.82 per cent to Rs 29.90, while Corporation Bank and Allahabad Bank closed 2.65 per cent and 8.06 per cent up at Rs 25.15 and Rs 44.90, respectively.

The government will also infuse Rs 3,806 crore in Indian Overseas Bank. Shares of the bank, however, closed 1.99 per cent down at Rs 12.30.

“This is positive as it comes at a time when NBFCs are facing liquidity issue, and the capital will help some banks to be kept out of PCA so that lending can pick up and increase market share of public sector banks specially the recent banks which have exited PCA. We have BUY rating on Allahabad Bank, Bank of India and Oriental Bank of Commerce,”said Sameer Kalra - Equity Research Analyst at Target Investing.

The government in December had infused Rs 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds.