Public sector Bank of India (BoI) plans to raise up to Rs 13,006 crore through a mix of instruments such as innovative perpetual debt, preference shares and Tier-II bonds to shore up capital adequacy ratio (CAR).
The bank’s board has approved the proposal to raise funds, which is enabling provisions. The bank will raise capital based on credit growth and market conditions, said BoI Chief Financial Officer V K R Agarwal. The bank has a headroom to raise up to Rs 6,300 crore via Tier-I bonds and Rs 6,700 crore via Tier-II bonds. Its CAR stood at 13.01 per cent at the end of March 2009, up from 12.01 per cent a year ago.
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Agarwal said the Mumbai-based public sector lender would like to maintain the 13 per cent CAR all along. Besides its balance sheet, the bank has to factor in capital requirements of overseas subsidiaries and ventures such as life insurance company Star Union Dai Ichi where it holds 51 per cent stake.
There is no redemption of Tier-II or any other capital in 2009-10. With 20 per cent projected growth in credit, the lender expects to add advances worth Rs 30,000 crore in 2009-10. Its gross advances stood at Rs 1, 44,731 crore at the end of March 2009. Total business is expected to touch Rs 4,00,000 crore by the end of the current financial year.
The scrip of BoI On Wednesday closed at Rs 346.4, up 1.12 per cent over its previous close of Rs 342.55 on the Bombay Stock Exchange.
