Private sector South Indian Bank Ltd plans to raise around Rs 50 crore through bonds to maintain its capital adequacy ratio (CAR) and has targeted Rs 10,000 crore business during the current fiscal.
"We will opt for tier II route instead of floating an initial public offer (IPO)," chairman A Sethumadhavan said. He said after the bond issue, the bank's CAR is expected to be around 11 per cent. During 2000, the bank had raised around Rs 20.6 crore to maintain its CAR above the required norm of 9 per cent. Last year, its capital adequacy ratio was 10.4 per cent.
Sethumadhavan said norms for raising the Rs 50 crore bond are being worked out. He said the bank plans to increase its business to around Rs 10,000 crore during the current fiscal from 8,500 crore, gross profit of around Rs 160 crore, net profit to around Rs 55 crore.
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During the first six months of the fiscal, the bank had a gross profit of around Rs 70.30 crore and net profit of around Rs 24.21 crore.
He said the net NPA is expected to be reduced by 1 per cent to 7 per cent. Sethumadhavan said the recovery department has been placed under the direct control of the deputy general manager and steps have been taken for strengthening the credit monitoring system and streamlining the recovery procedures.
According to the bank chief, said nearly 260 branches will be linked within the next three years under the bank's technology upgradation plan.
Sethumadhavan, however, ruled out any takeover threat from Rajesh Goenka's companies which recently bought nearly 4.6 per cent stake in the bank. Other major shareholders in the bank include ICICI and UTI which hold around 16 per cent stake. Other financial institutions hold around 4 per cent. South Indian Bank itself holds 10 per cent stake in Bharat Overseas Bank.
Sethumadhavan said the bank has special schemes for non-resident Indians, who account for 30 per cent of the bank's deposits. The bank has designated 14 branches exclusively for NRIs, he said.