BoI, UBI staff may get Canara Bank loans to buy shares of their banks

Bank of India and Union Bank of India have made arrangements with Canara Bank to provide collateral-free loans to their respective employees, a veiled move to fund purchase of shares under Employee Stock Purchase Scheme (ESPS). Regulations do not allow banks to offer loans to their own employees for purchasing shares under ESPS.

Both Bank of India and Union Bank of India have informally told their employees that they may take loans from Canara Bank should they want to purchase shares. The move reflects the desperation by the lenders while several other state-owned banks had earlier faced lukewarm response on their ESPS amid their financial stress. Bank of India even disbursed February staff salary in the mid of the month apparently to encourage employees buy shares.