LIC proposes to pump in Rs 143 crore in Corporation Bank

Following the government's decision to infuse capital into Corporation Bank to the tune of Rs 857 crore, the state-owned bank on Monday said it has received a letter from LIC expressing interest to infuse Rs 143 crore into it by way of preferential equity.

The matter will be placed for shareholders' approval in its forthcoming annual general meeting on September 28.

"The company (bank) have received a letter dated September 11, 2015 from Life Insurance Corporation (LIC) of India expressing their intention to infuse capital to the extent of Rs 143 crore into the capital funds of the bank," it said in a regulatory filing with the Bombay Stock Exchange.

In the same filing, the bank said it is growing at an average rate of "around 20 per cent over the last many years" and it is issuing the shares to meet the growing requirement of funds for expanding the business.

"The bank proposes to raise funds by way of preferential issue of upto 2,81,60,693 equity shares at a price of Rs 50.78 per share (including premium)," it said.

It said the capital to be raised through this preferential allotment of equity will not be used by it, its subsidiaries or any joint-ventures to make investments in whatever form.

However, even though the bank is able to receive shareholders' approval for the capital infusion, LIC's stake in the bank as per the share-holding will decrease from the present 22.54 to 21.22 percent.

The Indian president's share - which is the primary promoter of the bank - will increase from the present 63.33 per cent to 67.20 per cent following enforcement of the government's decision to raise capital.

The share of its other stakeholders will also reduce from the current 14.13 per cent to 11.58 per cent following the government's move.

Reacting to this development, shares of the bank on Tuesday rose 2.03 per cent to Rs 47.75 apiece on Bombay Stock Exchange (BSE) in the afternoon trade.