Karur Vysya Bank (KVB) has got Foreign Investment Promotion Board (FIPB’s) approval to issue shares, worth Rs 107.50 crore to foreign investors.
According to bank’s senior official this will be 25 per cent of bank’s proposed rights issue worth Rs 450 crore.
P T Kuppuswamy, managing director and chief executive officer, Karur Vysya Bank (KVB) told Business Standard that “before March 2011, the bank is planning to raise around Rs 300-325 crore and remaining, of the Rs 450 crore, will be raised by May 2011.”
Of the total issue, 25 per cent will be issued to Foreign Institutional Investor (FIIs), for which the Bank has got approval from the FIPB.
It may be noted, the bank is planning to come out with a rights issue during the current fiscal. It has said, it will raise around Rs 450 crore before May 2011. Besides, the bank also lined up plans to raise money, to increase its netowned funds by another Rs 1,900 crore by 2016, which will be a centenary year for the KVB.
The proposed fund raising plans are to support bank’s business target of Rs 1.25 lakh crore. Its current capital adequacy ratio (CAR) is 14 per cent and the proposed fund raising would help the bank to over the next two years.The bank has set a target of Rs 50,000 crore total business by March 31,2012.
“By 2016, our business target is Rs 1.25 lakh crore, including Rs 75,000 crore deposits and Rs 50,000 crore advances, to support this we may have to increase our net owned funds to Rs 4,000-5,000 crore from Rs 2,100 crore, which includes proposed Rs 450 crore rights issue,” said Kuppuswamy.
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Bank’s total business as on March 31, 2010 was at Rs 32,946.85 crore, an increase of 28.38 per cent year on year.
Kuppuswamy said, the increased focus on the CASA segment resulted in bank’s posting gains in the Low Cost Deposit segment by registering a 37 per cent growth year-on-year. “Our focus will be on improving CASA and advances segments and emphasis will be on customer acquisition,” he added.