Hindujas seek to up IndusInd stake to 40%

The Hinduja group, promoters of IndusInd Bank, has applied to the Reserve Bank of India (RBI) for allowing them to increase their stake in the bank to 40 per cent from 31.3 per cent at present. The Foreign Investment Promotion Board (FIPB) has recently cleared the proposal.

IndusInd is also looking at securitising its portfolio to the tune Rs 2300 crore by March 2005.

"The Supreme Court while allowing the merger of Ashok Leyland Finance Ltd (ALFL) with IndusInd had directed Ashok Leyland Ltd (ALL), which hold 16 per cent in the bank, to reduce its stake to 10 per cent. Our promoters have the option of buying out ALL's excess six per cent, but this is yet to be finalised," explained Bhaskar Ghosh, managing director IndusInd Bank, while inaugurating their BurraBazzar branch in the city today.

"Our promoters also have the option acquiring the additional stake through market purchases," he added.

Talking about the capital adequacy ratio (CAR) of the bank, Ghosh said, "The bank's CAR at present stands at 13 per cent and we have targeted a net business level of Rs 19,000 crore.

"We have recently securitised retail portfolio of Rs 1,200 in two tranches of Rs 600 crore and Rs 700 crore. At the end of the fiscal this figure is likely to touch Rs 2,300 crore. Being predominantly corporate deposits our cost of fund is higher than our public sector counterparts and it makes sense for us to securitise our assets, which we do in tranches," explained Ghosh. "We sell mainly to foreign, and other private sector banks," he added.

Talking about the company's plans Ghosh said, "RBI has allowed IndusInd to convert as many as 52 ALFL outlets to bank branches this year.

Next year we plan to convert another 80 outlets into branches. This will provide IndusInd with a reach of 200 branch by end of 2005 which will place it among the top three banks with branch network.