Corporation Bank needs Rs 6,000 crore capital

Mangalore-based Corporation Bank has projected Rs 4,000-6,000 crore capital requirement to the government assuming a business growth of 25 per cent over the next three years with capital adequacy ratio of more than 12 per cent.

The government had asked all the public sector banks to detail capital requirement projections for the next 3-5 years as it plans to infuse capital in these banks.

“Our preferred mode of capital infusion will either through rights issue or preferential allotment of equity shares to the government. However, we will not need any capital in the current financial year,” J.M. Garg, chairman and managing director of the state-owned bank said at the sidelines of a press meet to announce a tie-up with a mobile operator for money transfer.

Corporation bank capital adequacy ratio, as on end September, was at 18.18 per cent – one of highest among Indian banks.

Most of the banks now prefer to have capital adequacy ratio of 12 per cent though minimum regulatory requirement is only 9 per cent.

The government has indicated that it may start the capital infusion process by end of December or early January, assuming funds from the World Bank for bank capitalisation comes in this month itself.

The World Bank recently granted $ 2-billion loan for bank capitalisation in India and there are talks that it may further grant another $ 1 billion for the same purpose.