ICICI to subscribe to South Indian rights

ICICI Bank, which holds a little over 11 per cent in South Indian Bank (SIB), is keen on subscribing to the SIB rights issue.

Kalpana Morparia, deputy managing director of ICICI Bank, said the Bank intends to subscribe to the full amount possible under the rights issue.

"Although I have not gone through the prospectus, we intend to subscribe to the rights issue," she explained. SIB was promoted by the erstwhile ICICI Ltd.

Morparia had earlier said, "In the post merger era at ICICI we see our holding in the bank as financial investment and we will go strictly by financial considerations in the bank with regards to our holding. If we find the value of investment in the bank falling we would be open to disposing off our stake."

Although the record date for the issue is yet to be fixed, SIB would be floating 1.19 crore equity shares of Rs 10 each for cash at a premium of Rs 28 to Rs 35 per equity share to the existing equity shareholders in the ratio of one equity share for every three equity shares held aggregating Rs 45.29 crore to Rs 53.64 crore.

Meanwhile, SIB has targeted a Rs 500 crore net worth during next year. Shoring up its capital base was part of its plan to attain a critical mass, based on which the bank would formulate the future long-term growth strategies.

SIB's gross NPAs was 9.27 per cent of its total customer assets as on March 2003. SIB's net NPAs, however, represented 5.98 per cent of its total customer assets for 2003.

The bank has however provided for its NPA as per the RBI guidelines and has also taken up steps like recovery drives, improved risk management practices to reduce the NPAs. It has also taken a stake in Asset Reconstruction Company of India Ltd, in order to transfer the non-performing assets.