Centurion Bank is looking at preferential and private placement of equity to garner Rs 120 crore, Centurion Bank's executive director V S Srinivasan said.
Earlier, the bank's rights issue of Rs 128.80 crore had flopped because of poor response from retail investors.
The bank's current capital adequacy ratio (CAR) is around 9.67 per cent, above the Reserve Bank of India stipulated norms of 9 per cent.
"We need capital for growth. The board should give the approval around the third quarter. The money has to come in by the beginning of the next year. We are looking at an inflow of above Rs 120 crore," Srinivasan said.
Meanwhile, Centurion Bank promoter TCFC Finance has pledged its entire 23.12 per cent stake in Centurion Bank with the bank.
Its holding (3.64 crore shares) has been pledged as part of the financial support agreement between the bank and its promoter TCFC Finance.
TCFC Finance had merged itself with Centurion Bank around two and half years ago.
According to the terms of the agreement, which is valid for six years from the date of merger, if the provisioning on account of bad loans exceeded Rs 49.9 crore, TCFC Finance will have to make good the amount up to a maximum of Rs 40 crore.
The cumulative provisioning till March 31,2001 had reached Rs 29.92 crore.
In other words, the bank has the right to sell of part of TCFC Finance holding to realise the money. Going by the current market price, the TCFC Finance holding can fetch over Rs 32 crore.
At present, Keppel Bank has around 17.5 per cent stake in the bank followed by Asian Development Bank (10.22 per cent) and International Finance Corporation (8.36 per cent).
"Keppel is looking at increasing its stake in the bank to 20 per cent," said Srinivasan. "And in case it wants to hike stake to 49 per cent, it has to take board approval. If they don't do it, we would be looking at other strategic investors," he added.
The other major investors is TCFC Finance with a 23.12 per cent stake and its affiliated companies hold around another 10 to 12 per cent stake.
He added that the bank has provided for most of the non performing assets (NPAs) due to the merger of TCFC with Centurion Bank. "Only around Rs 19 crore of NPAs have not been provided for. The bank has set up a separate remedial management group for recovery efforts. The bank expects to recover around Rs 10-12 crore this financial year," said Srinivasan.
