Kolkata-based Allahabad Bank is planning to raise Rs 1,000 crore through bonds by the end of this month. Out of this, the bank intends to raise Rs 900 crore through tier II bonds, and Rs 100 crore through tier I bonds.
The bank is planning to raise Rs 500 crore by way of upper tier II bonds, Rs 400 crore through subordinated bonds in the lower tier II category, and Rs 100 crore though innovative perpetual debt instruments (IPDI), which falls in the tier I capital.
"We were waiting for the Reserve Bank of India (RBI to cut rates, and now with that happening we have decided to go for capital raising. Also, the market is conducive now for raising funds," said K R Kamath, chairman and managing director, Allahabad Bank
The bank's capital adequacy ratio (CAR) stood at 12.20 per cent as on December 2008.
This apart, the bank will take a call on reducing the interest rate on lending and deposits when the bank's asset liability committee (Alco) meets next week. The banks' prime lending rate at present is 12.50 per cent.
"Interest rates should come down as there is a case for reduction. The final decision will be taken after the Alco meets next week. There might be reduction in deposits rate first, or there might be a reduction in both deposits and lending rate together," Kamath said. The bank today informed the BSE that that Crisil and Care have rated its proposed upper tier II bonds of 500 crore as AA/ stable and AA respectively, and subordinated lower tier II bonds of Rs 400 crore as AA/ stable and AA+ respectively.
