BoB expects asset norms to crimp growth

The regulatory norm to maintain at least 75 per cent of assets in India is likely to restrict Bank of Baroda's (BoB) overseas expansion plans, according to its draft prospectus filed with Securities and Exchange Board of India for its second public offer.

The state-owned bank has presence in 19 countries including Britain and Malaysia and has 59 branches and offices. The total business - deposits plus advances - from international operations for 2004-05 was Rs 19,957.2 crore as against Rs 16,694.3 crore in previous fiscal.

The international operations contributed 15.47 per cent and 9.28 per cent of total business, deposits plus advances, and total income respectively in 2004-05, up from 14.78 per cent and 7.74 per cent, respectively, in the financial year 2004.

"We have to maintain assets in India equivalent to not less than 75 per cent of our net demand and time liabilities in India, which in turn may restrict us from building overseas asset portfolios and exploiting business opportunities there," BOB said in its prospectus.

Besides regulatory guidelines, international operations face inherent risks such as restrictions on repatriation of profits and capital in some places, and exchange rate volatility.

The international branches, subsidiaries and associates provide retail banking, structured products and wealth management services, in addition to developing cross border business by providing trade and project finance, remittances, syndication's and correspondent banking services.