At present, the bank's equity base is estimated at Rs 446 crore and the Centre holds a 65.23 per cent stake. The bank may offer one share for every four or three held, a top bank official said, declining to be identified.
"If we go for 1:4, we will raise Rs 112 crore, with Rs 50 crore to be raised from the market. But if the issue is floated at 1:3, Rs 149 crore would be raised, of which Rs 67 crore would be raised from the market and the remaining from the government," the executive said.State Bank of India (SBI) had raised about Rs 16,000 crore through a rights issue in March this year and the government had chipped in with around Rs 10,000 crore.
Union Bank of India is also in talks with the government for a rights issue.The government had cleared SBI's rights issue as there was little headway for the bank to raise capital through a follow-on offer. The government holds 59.73 per cent stake in the bank as the law prohibits it from lowering its stake below 55 per cent.
However, in the case of Allahabad Bank, there is scope for the Centre to reduce its stake to 51 per cent though the management hopes the government equity does not fall.
Earlier, A C Mahajan, chairman and managing director of the bank said that it would raise around Rs 300 crore in 2008-09.
The bank requires another Rs 1,200 crore to fund its expansion. It hopes to make a profit of Rs 900 crore.
