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Govt plans revival of three weak banks

The banking division of the finance ministry has cleared a Rs 24 billion ($516.7 million) revival package for three weak state-run banks, a business daily said on Monday.

The three banks are Indian Bank, United Bank and UCO bank, the Business Standard newspaper said. All three banks are saddled with a high level of non-performing assets.

The government and the Reserve Bank of India have long been concerned by the continuous losses, large number of non-performing assets, high costs and poor net worth of the three banks. The paper quoted unidentified senior government sources as saying the revival package was awaiting approval of Finance Minister Yashwant Sinha.

In the 2000-01 (April-March) budget, Sinha had said the government would not close down any state-run bank but would restructure some weak banks.

Indian Bank, which has already received Rs 8 billion earlier, will once again grab the lion's share of about Rs 21 billion, the paper said.

UCO Bank and United Bank of India would get around Rs 2 billion and Rs 1 billion each, it said. The Rs 24 billion package includes a sum for recapitalisation, apart from spending on voluntary retirement schemes and costs in upgrading technology, the paper said.

It said over the past four years, the government has already provided around Rs 18.50 billion to the three weak banks.

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