Centurion plans to tap market afresh

Centurion Bank, the new generation private sector bank, is planning to tap the market to raise capital to support its growth plans and adhere to the stringent Basel-II norms.

The bank in its court scheme had indicated that it would need to raise around Rs 100 crore in the financial year 2005-06, said a senior bank official.

The restructuring package for the bank included a reduction in the face value of its shares and a recapitalisation. The fresh capital infusion is expected to be completed by March 2005, said banking sources.

Shailendra Bhandari, managing director, said the bank has plans to expand its operations. The board in its meeting on January 10 will consider a proposal to raise additional equity capital in one or more tranches.

The capital will be raised either by way of a domestic public issue or an international offering (ADR/GDR /FCCB or other convertible instruments), subject to the approval of the shareholders, said the bank in a statement to the Bombay Stock Exchange (BSE).

The bank will also convene an extraordinary general meeting of the shareholders for the same purpose, it said The bank in September raised Rs 90.8 crore at Rs 4 a share through a rights issue.

The rights was is in addition to the Rs 154 crore of equity capital infusion in February 2004 by a group of investors, including Bank of Muscat, Keppel Corporation, Sabre Capital and Asian Development Bank. The infusion will enable the bank adhere to the fresh Reserve Bank of India (RBI) guidelines.

The draft guidelines on ownership and governance in the Indian private sector, released in July, had recommended an increase in the entry capital requirement for new private banks from Rs 200 crore to Rs 300 crore within three years.

At present, the bank's paid-up capital stands at around Rs 160 crore, while its capital adequacy ratio is around 9.5 per cent.