Indian Bank float likely by Aug-end/early Sep

Indian Bank, which reported a whopping 114.88 per cent growth in net profit for the year ending March 31, 2004, expects its maiden issue to hit the market by end August or early September.

M B N Rao, chairman and managing director of the bank, said decision regarding the size and pricing of the issue are yet to be taken.

While it is not essential for a public sector bank to show profits for three consecutive years "" as in the case of corporates, according to the Securities and Exchange Board of India norms "" before going in for an initial public offering, Indian Bank has been keen to show its financial strength to in a bid to boost floatation value, and is also banking on the goodwill of its customer base of 16 million.

Net profit at the bank increased to Rs 405.75 crore in 2003-04 compared with Rs 188.83 crore 2002-03. Net non-performing assets (NPAs) came down to 2.71 per cent from 6.15 per cent. Operating profit rose by 35.95 per cent to Rs 802.46 crore.

Net NPA recovery stood at Rs 320 crore compared with Rs 270 crore last year, while gross NPA fell by Rs 438 crore. Deposits increased by Rs 3,428 crore to Rs 30,444 crore compared with a growth of Rs 2,977 crore during the previous year. Gross credit increased only by Rs 1,782 crore to Rs 14,935 crore in 2003-04.

On the dilution of government stake in the bank, Rao said that this would be done in a phased manner.

On the recent RBI notification requiring weak banks to get the approval on dividend payouts, Rao said that Indian Bank was fulfilling the necessary conditions.

The bank has provided about 68 per cent of the total advances, while around Rs 300 crore has been provided as pension for bank employees. The notification requires the banks' net NPA to be less than three per cent. Capital adequacy ratio to be above 11 per cent.

It also stipulates that the banks will have to provide adequately for bad assets, staff retirement benefits, transfer of profits to statutory reserves and investment fluctuation reserves.

The bank has gained autonomy from the government to recruit in the deputy general manager cadre. The bank plans to increase its total business by Rs 10,000 crore during the current financial year.

Rao said that they have identified a core banking solution provider and expect to achieve zero net NPAs in the next two years.