ICICI Bank rules out need for fresh capital

ICICI Bank sees no need to raise fresh capital in the near future. However, if the Reserve Bank of India (RBI) does not realign the risk weightage as per the Basel II accord it would have to reassess its capital raising plans.

The bank is also not averse to divesting its investments in various entities to raise fresh capital, if the need be.

"There's no urgent need to raise fresh capital," said K V Kamath managing director and chief executive officer, ICICI Bank. The implementation of Basel II will have no impact on the bank's capital adequacy if the risk weightage is realigned as per the Basel II accord. The decision to raise fresh capital will depend on how the policy decisions shape up in the future, Kamath said.

The bank's capital adequacy ratio as on March 31, 2005 stood at 11.78 per cent. At present, RBI has asked banks to maintain a capital risk weightage of 75 per cent on home loans and 125 per cent on personal loans and credit cards.

However, in the Basel II accord, the prescribed capital risk weight for home loans is 35 per cent and for retail loans is 75 per cent, hence, this could free some capital for banks.

"We are open to looking at raising funds through tier I equivalent instruments such as preference shares and other hybrid instruments as when policy initiatives are formulated," said Kamath.

"In addition, we could also take our investments to the markets," he added.

On whether the bank has any plans to divest its stake in ICICI Lombard General Insurance Company and ICICI Prudential Life, Kamath said nothing was on the cards for now.

Kamath had earlier stated that it will divest its stake in ICICI Lombard and ICICI Prudential Life once these entities attain certain market share.