Public sector lender Allahabad Bank has deferred its plans to raise funds through rights issue and perpetual debt.
"As of now, we are not in favour of any dilution of government's stake. Except for State Bank of India, the government has not allowed any other bank to go for a rights issue. We will raise funds at an opportune time. If an increase in asset base is required, we have headroom to raise up up Rs 2,500 crore through tier I and II capital. This will help maintain the present level of capital adequacy ratio (CAR) for the next two years," Allahabad Bank Chairman & Managing Director KR Kamath said at a press conference here today.
At present the government holding in the Kolkata-headquartered bank is 55.23 per cent.
In June, the bank's board Allahabad Bank had approved the proposal to approach the finance ministry to obtain permission for a rights issue.
"The government has not yet responded to the request. This is not the right time for rights issue, as the book value per share of bank is close to Rs118, while the market value at present is Rs 62," said the bank's executive director K K Agarwal.
Earlier this year, A C Mahajan, former CMD of the bank had said that the bank wanted to raise Rs 300 crore through perpetual debt, which falls in the in the tier I category. Agarwal said, at present, the bank did not intend to raise funds through this route.
Other public sector players like Union Bank of India and Syndicate Bank have also deferred their rights issue plans due to market volatility.
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Allahabad Bank has also shelved its plans of converting its representative office in China into a full fledged branch.
The bank is aiming for an overall deposit growth of around 13-14 per cent, as it is deliberately going slow in mobilising deposit on differential rate of interest segment. Excluding the bulk deposits, the targeted growth in deposits will be about 18 per cent. The deposits with a differential rate of interest have come came down from Rs 20,000 crore last year to Rs 19,000 crore this year. The total deposits of the bank as on June 2008, was Rs 73,207 crore. The net interest margin of the bank at present is 2.75 per cent.
Till September, the total credit growth on an year-on-year basis was about 25 per cent.