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United Bank of India permitted to write off accumulated losses against capital

The Union Cabinet has approved netting off of United Bank of India's (UBI) accumulated losses amounting to Rs 278.44 crore against the capital of Rs 1,810.87 crore with effect from March 31. The proposal does not involve any financial outgo since it was only a technical write-off.

This will enable the bank to strengthen its balance sheet, facilitate adoption of Basle-II, create investment fluctuation reserve as per RBI guidelines, meet the future capital requirements through initial public offering, facilitate linkages with foreign banks, instill confidence among investors for investing in the bank's share and future expansion.

The Union Cabinet has allowed bank to return equity share capital of around Rs 700 crore by United Bank to the Government and also gave its nod for converting a portion of the remaining equity share capital of around Rs 832.43 crore of the United Bank of India into preference share capital.

The Government has in the past permitted 13 government owned banks Punjab National Bank, Bank of India, Dena Bank, Allahabad Bank, IOB, Canara Bank, Andhra Bank, Bank of Maharashtra, Punjab and Sind Bank, Syndicate Bank, Vijaya Bank, Central Bank of India, UCO bank to write off their accumulated losses against capital.

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