Mumbai: State-run Union Bank of India is planning to issue shares on a right basis and has sought permission from the government.

“We have applied to the government for a rights issue. However, discussions are still in the preliminary stage and details of the issue are yet to be finalised,” a top bank official told NewsWire18.

However, chairman and managing director M V Nair was not available for comment. Union Bank has virtually no headroom for raising equity capital as the government’s holding in the bank is at 55.43% — close to the mandatory minimum of 51%.

Banks’ capital needs have grown partly due to expanding business, but mainly due to implementation of Basel-II capital adequacy norms, which require banks to set aside capital to account for operational risks apart from credit risks.

Due to implementation of Basel-II norms, banks also have to provide higher capital for certain classes of assets.

Source : DNA