)
Mid-sized lender Union Bank of India plans to raise Rs 3,000 crore towards equity to meet Basel-III norms after 2015.
Though it may not need any fresh equity until 2015, the bank has given a proposal to the Ministry of Finance for the additional capital and it is currently being studied, Union Bank chairman and managing director D Sarkar said.
The government roughly holds 58% in the bank as on June 30, 2013.
"Till 2015, with the present growth we may not require any additional capital as per Basel-3. After that we have to increase the capital. We may need additional Rs 3,000 crore to meet the Basel requirement," said Sarkar during his recent visit to Hyderabad.
In accordance with Basel III norms, Indian banks will have to maintain their capital adequacy ratio at 9% as against the minimum recommended requirement of 8%.
In accordance with Basel III norms, Indian banks will have to maintain their capital adequacy ratio at 9% as against the minimum recommended requirement of 8%.
Under Basel-III accord, banks have to maintain Tier-one capital (equity and reserves) at 7% of risk weighted assets (RWA) and a capital conservation bugger of 2.5% of RWA.
"Last year, we received Rs 1,140 crore capital infusion from the government. We gave proposal to infuse nearly Rs 1,800 crore in this year," the banker said.
A senior official of the public sector lender, on condition of anonymity, said though they may not need the additional capital until 2015, the bank has submitted the proposal to the government for equity infusion in future.
"This year we have proposals to raise Rs 1,216 crore though Qualified Institutional Placement (QIP) route. With that the government's shareholding in the bank will come down. In order to meet the shareholding at the current level, the government will have to infuse Rs 1,708 crore additional capital," the bank official told PTI.
The Basel-III capital regulation has been implemented from April 1, 2013, in India in phases and it will be fully implemented as on March 31, 2018.
Replying to a query, Sarkar said, corporate credit demand is extremely weak and deposits are not coming at the desired levels due to people preferring other modes of investments such as gold and real estate.
"In current fiscal, our bank has given the guidance that we may achieve 14 to 15% deposit growth and 15 to 16% credit growth," Sarkar said.
Union Bank reported a 9.5% rise in net profit to Rs 560.22 crore for the first quarter ended June 30. It had a profit of Rs 511.59 crore during the same period of the previous fiscal. Total income increased to Rs 7,613.53 crore from Rs 6,561.10 crore.
